Federal Government will tap $2.2 billion from Eurobond issuance to fund petrol subsidies.
This is aside from the local borrowing the government also plans to exploit to fund petrol subsidy in 2022.
Digging into the eurobond to fund subsidy is expected to start this month or next.
Minister of Finance Budget and National Planning, Mrs Zainab Ahmed disclosed this to Reuters news agency on the sidelines of an Arab-African conference in Cairo.
Ahmed told Reuters that “rising oil prices has put us in a very precarious position … because we import refined products … and it means that our subsidy cost is really increasing”.
The federal government had set an exit date for subsidy payments at June 2022, but having met resistance from the Nigeria Labour Congress (NLC), the government has decided to continue with the payout as well as increase its projections for subsidy payments in 2022 to close to N3 trillion.
Nigeria has found itself in a very precarious position following Russia’s invasion of Ukraine. While the price of crude oil has shot up to over $110/b the government had in its 2022 budget, pegged crude oil sale at $62/b.
The difference between the current $110 and the projected $62/b is supposed to be saved but because of the need to fund petrol subsidy there will be no savings into the excess crude account.
Ahmed told Reuters “the government was working with lawmakers to boost revenues and that the rise in oil prices means that borrowings will increase more than planned”.
Overall budget deficit was initially projected at N6.39 trillion in 2022 with the current developments it is expected to be much higher.