By Tony Obiechina, Abuja
The Federal Government has decried the growing inflation in Nigeria, saying mechanisms have been activated to check the trend.
The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed stated this at the House of Representatives in Abuja on Wednesday while appearing before the committee on finance to defend the budget proposed by the ministry in the 2023 Appropriation Bill.
The Minister however stated that President Muhammadu Buhari has directed the National Food Security Council to brainstorm and make recommendations on the way forward.
Chairman of the committee, James Faleke, had asked about efforts being made by the government to arrest the rising inflation in the country, which he said had become a concern to many Nigerians.
In her response, the minister blamed it on various factors, saying, “On inflation, it is a very serious situation, where Nigeria’s inflation is now 23 per cent. The inflation in Nigeria has a number of components. One of them is imported inflation – occurrences in other countries also affect Nigeria. For example the war between Ukraine and Russia has an impact on Nigeria in the sense that some of the inputs for food production are affected.
“Also the decisions taken by the Central Banks in the USA and Europe on monetary tightening have also an impact on their own level of inflation; that also affects our country. But in Nigeria, we also have food inflation and because of the high cost of diesel, we find this showing up in food prices. So, when farmers produce their goods and they have to transport them to markets, the increasing cost of transportation is impacting on the food.
“What the Central Bank of Nigeria is doing is continuing to monitor inflation by tightening money and mopping up liquidity.”
Ahmed added, “On the side of the government, the President has authorised the National Food Security Council and we have held a meeting on how some support will be provided. The committee will be meeting again in the next couple of days to provide recommendations to Mr. President.”
The minister also said more scanners had been procured to be installed at ports and borders to discourage use of other countries’ ports. She also stated that all government independent revenues had been remitted to the Treasury Single Account.
She said, “On why our ports are not attractive, it is a very big problem. The ports’ congestion and the unfortunate reality is that a lot of importers prefer to go to our neighbours. On the measures we are taking as the Ministry of Finance, we have provided and bought some very large scanners. Our assessment is that it will help to fasten the clearing process and decongest the ports.
“The Nigeria Ports Authority, on their own, is trying to reorganise ports to attain better efficiency, including control of entry and exit to the ports.
“The rail line from Lagos to Abuja is also being extended so that containers, even before inspection, can be taken out of the Apapa ports to some other locations for inspections to be done. This will enable Nigeria to attract its own business.”
Speaking on the performance of the 2022 budget, the Minister said N3.52tn was for debt service out of the estimated total of N17.32tn. She also said the level of borrowing was N1.26tn ahead of July 2022. She recalled that the government had a proposal of N6.1tn new borrowings – N3.5tn from domestic sources and N2.5tn from foreign sources.
Mrs Ahmed said as at August 2022, the government had borrowed N4.06tn from local sources, including the Central Bank of Nigeria.
She further stated that crude oil theft and subsidy payment on Premium Motor Spirit (petrol) by the Nigerian National Petroleum Company Limited were factors responsible for the overall poor performance of the 2022 budget.
She, however, noted that the government was mindful of the development and was working on safety nets to cushion the effects on the economy.
The Minister said, “Crude oil production challenges and PMS subsidy deductions by NNPC constitute a significant threat to the achievement of our revenue growth targets, as seen in the 2022 performance up to August. Revenue generation remains the major fiscal constraint of the federation. The systemic resource mobilization problem has been compounded by recent economic recessions.
“Efforts have been mainly focused on improving tax administration and collection efficiency. These efforts are bearing fruits with non-oil taxes mostly performing above target for the period.
“Overall, fiscal risks are somewhat elevated, following weaker-than-expected domestic economic performance and structural issues in the domestic economy.
“The goal of fiscal interventions are to further stimulate the economy through carefully calibrated regulatory/policy measures designed to boost domestic value-addition, de-risk the enterprise environment, attract external investment and sources of funding, etc. Bold, decisive and urgent action is urgently required to address revenue underperformance.
“However, in exercising its policy options, the government will remain mindful of the need to provide safety nets to cushion the impact of reform measures on the vulnerable segments of the population.”
