FG to remove fuel subsidy 2012 ...To devalue the naira
PRESIDENT Goodluck Jonathan, on Tuesday, sent the 2012 to 2015 Medium-Term Fiscal Framework (MTFF) and the Fiscal Strategy Paper (FSP), to the National Assembly, which indicated that the Federal Government would phase out fuel subsidy in the New Year.
The document, which indicates government's income and expenditure profile for 2012 to 2015, shows that while oil receipts are expected to be on steady rise during the period, the Federal Government is ready to remove fuel subsidy.
According to the document, the Federal Government was adopting an oil benchmark of $75 to calculate oil revenues for the budget. Also, while oil production averaged 2.43 million barrels per day for 2011, the average for 2012 is 2.4 million barrels, while daily production is expected to average 2.550, 2.575 and 2.6 million barrels for 2013, 2014 and 2015 respectively.
According to the revenue framework of the government, a major component of the fiscal consolidation policy is the removal of fuel subsidy beginning from 2012.
The government expects to free up to N1.2trillion in savings from the expected removal of subsidy.
The document read: “A major component of the policy of fiscal consolidation is government's intent to phase out fuel subsidy, beginning from the 2012 fiscal year. This will free up to about N1.2 trillion in savings, part of which can be deployed into providing safety nets for poor segments of the society to ameliorate the effects of subsidy removal.
“The accrual to the Sovereign Wealth Fund (SWF) as a result of the withdrawal of the fuel subsidy will also augment funds for critical infrastructure through the infrastructure window of the SWF.”
The document also indicates that the Federal Government intends to devalue the national currency by three naira.
While the official exchange rate for 2011 remains at N150 to the dollar, the exchange rate from 2012 to 2015 will be N153 to the dollar.
However, the government expects growth in the non-oil exports areas, as well as a consistent reduction in domestic debts.
President Jonathan, who forwarded the document prepared by the Budget Office of the Federation, within the Ministry of Finance, in the letter dated September 22 and addressed to the Senate president, David Mark, said he was forwarding the Medium Term Fiscal Framework and the FSP to the lawmakers, in fulfillment of the provisions of the Fiscal Responsibility Act.
“l am pleased to forward herewith for your consideration the 2012-2015 Medium-Term Fiscal Frame work and Fiscal Strategy Paper and seize this opportunity to express my gratitude for the patriotism, cooperation and steady support of the leadership and all distinguished members of the Senate, in our collective to transform the economy of our dear country.
“Prepared against the backdrop of global uncertainty, l firmly believe that the MTFF will ensure that planned spending is set at prudent and sustainable levels and is consistent with governments overall medium term development objectives set out in the transformation agenda of the administration
“It is my hope that the National Assembly will approve the FSP and MTEF expeditiously, in order to bring the ongoing preparation of the 2012 Budget to quick closure,” he said.