NIGERIAN government revenue has fallen by 65% in 2020 when compared with the same period last year as a result of the devastating economic impact of the coronavirus lockdown according to finance minister Zainab Ahmed.
Being a mono-economy, Nigeria is heavily dependent on crude oil, with about 95% of government revenue coming from the export of petroleum products. Following the outbreak of the pandemic, however, both the demand and price of crude oil have collapsed, having a severe effect on government finances, forcing it to resort to borrowing to fund the 2020 budget.
According to Mrs Ahmed said this collapse in government revenue is what forced President Muhammadu Buhari to remove the government subsidy on domestic petrol. Nigeria spends about $8bn a year subsidising local patrol marketers and curiously, this subsidy remains steady, not falling in relation to market prices.
Last week, the government said it finally going to scrap the subsidy as the nation could no longer afford it. Ms Ahmed added that if the petrol subsidy returns, it would lead to a nationwide fuel scarcity because the government would not be able to pay marketers.
She said: “What we have been doing is not sustainable. If we bring back the fuel subsidy, we will fail because we will not be able to pay it and the problem of disputes with marketers will come back and then we will have queues again.
“We appeal to Nigerians to understand that in the past when subsidy was done, we could afford to do it but right now, we cannot pay. Remember that right now our revenue has gone down by about 65% so, it is not business as usual and we cannot do what we used to do anymore.”
Mrs Ahmed stated that the price of petrol would henceforth be determined by the price of crude oil. She also conceded that food prices were going up but said it was unlikely that they would rise further because of the increase in the price of petrol as most trucks conveying agricultural produce use diesel and not petrol.