Nigeria’s immediate past Governor of Central Bank of Nigeria (CBN), now Emir of Kano, Alhaji Muhammad Sanusi, has said the financial health of Nigeria is at risk and the country is heading towards bankruptcy.
Sanusi disclosed this during the third national treasury workshop held at the Kano State Government House on Wednesday.
He stressed that factors including fuel subsidy, debt servicing, and demurrage among other economic policies which he described as “unfavourable economic policies,” are consuming revenue of the nation.
“In 2011, when I was CBN governor, we spent $8bn importing petroleum and spent another $8.2bn subsidising the product
“100% of what we earn in the oil sector went out to import petrol. You are treasurers, is this sustainable?
“The country will be bankrupted and we are heading to bankruptcy,” the Emir warned.
Sanusi said further that, “For the Federal Government to place itself in a position where, (in finance you all know this is what we call a naked edge), the price of crude oil and petroleum products goes up, the Federal government pays, exchange rate moves, the Federal Government pays, interest rate moves, the Federal Government pays, demurrage, the Federal Government pays.
“What is so life-threatening about petroleum price that we have to sacrifice education, sacrifice health sector and sacrifice infrastructure for us to have cheap petroleum? And risk the financial health of the country.”
The former CBN boss advised that if truly President Buhari is fighting poverty, he should remove the risk on the national financial sector and stop the subsidy regime.
He said the President must tell Nigerians the facts about the economic situation and act promptly to address it.
Sanusi also lamented over the number of Nigerians living in poverty and expressed worry about the state of public finance in the country.
“So, let us talk about the state of public finance in Nigeria. We have a number of very difficult decisions that we must make, and we should face the reality.
“It is a difficult decision, but if the president really wants to deal with poverty, he has to deal with this first. He has to tell Nigerians, that they have to be ready, if the international price of fuel goes up, people must be ready to pay more. If it goes down, people will benefit. We have to be responsible; this is what happens everywhere in the world.
“His Excellency, the President, said in his inaugural speech that his government would like to lift 100 million people out of poverty. It was a speech that was well received, not only in this country but worldwide.
“The number of people living in abject poverty in Nigeria is frightening. By 2050, 85 percent of those living in extreme poverty in the world will be from the African continent, and Nigeria and the Democratic Republic of Congo will top the list.
“Two days ago, I read that the percentage of government revenue going to debt servicing had risen to 70 percent. These numbers are not lying. They are public numbers. I read them in the newspapers. When you are spending 70 per cent of your revenue on debt services, then you are managing 30 percent.
“And then, you continue subsidising petroleum products and spending N1.5trillion per annum on petroleum subsidy! And then we are subsidising electricity tariff. And maybe, you have to borrow from the capital market or the Central Bank of Nigeria to service the shortfall in the electricity tariff. Where is the money to pay salaries? Where is the money for education and other government projects?”
The Emir advised the Federal Government to look at the components of petroleum price and address the problems identified.
He also advised the Federal Government to stop the payment of fuel subsidy.
“For 30 years we have had this project called petroleum subsidy which is not a subsidy. In Economics, it is a Edge. We don’t call it Edge because we know the implications.
“The first step we must do is stop this Edge and to at least make it a subsidy. Let me try to explain to, when you subsidise something, let’s say cost N100, you say to somebody this cost N100 and I am subsidising to the tune of 30% or 20%, it does not matter what interest rate.
“When you look at the components of petroleum price – the foreign exchange rate, the price, interest rate, demurrage, petroleum equalisation…Nigeria is the only country whose balance sheet does not benefit from an increase in the price of oil. And this did not start with this government it has been on for 20, 30 years.”