Emir Sanusi to Tinubu: Why are we borrowing after subsidy removal?

Muhammadu Sanusi II, the Emir of Kano, has said that he is worried about the federal government’s continuous reliance on borrowing even if the petrol subsidy has been removed.

In an interview with News Central TV today, the former governor of the Central Bank of Nigeria (CBN) said that weak fiscal discipline could hurt the benefits of recent economic reforms.

Sanusi, who has long criticized the subsidy system, said again that it was not sustainable and blamed the country’s past reliance on foreign refineries while domestic ones were not being used enough, according to Daily Trust.

He stated, “As an oil-producing country, we can’t keep helping foreign refineries when our own aren’t working.”

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He did say that things have gotten better in the industry lately, and that Nigeria is starting to move away from relying on imports and toward refining and exporting its own oil.

“Today, we own our own refinery. We don’t buy oil goods from other countries anymore; in fact, we even sell them to Europe. He said, “That’s good for the economy.”

The previous CBN governor supported the policy direction, but he had questions about the timing and order of the reforms, especially the removal of subsidies and the opening up of the foreign exchange market.

He said that doing things like this in a lax monetary climate made the naira lose value very quickly.

“Fake exchange rates can’t work, especially when you’re printing money.” There was going to be a drop in value.

“Getting rid of subsidies or letting exchange rates float are fantastic things to do for me. Did they happen at the proper time? Those are some questions. Were there other things that needed to be done but weren’t? These are different problems.

“Liberalizing the exchange rate in a lax monetary environment led to the currency’s quick decline in value.

“It’s not enough to say, “Oh, they took away the subsidies.” You had to. You can’t keep going when all of your money goes to paying off debt. Where will the money come from?

“But if you decide to end subsidies and free up exchange rates when monetary conditions are very loose, before you have tightened the money supply, the Naira falls into a bottomless pit.” That was a problem with time.

“We’ve taken away the subsidy. Now we’re using it. We shouldn’t see fiscal consolidation. You can’t stop wasting money and keep borrowing. I’ve mentioned this before. You need to see the good things. Why do we keep borrowing money if you don’t have to pay the subsidy and you have the money? What are we borrowing for?

His statements come at a time when there is a lot of debate around President Bola Ahmed Tinubu’s new loan request. He has asked the Senate to accept a $516.3 million loan for parts of the projected Sokoto–Badagry Superhighway.

The President wrote to Senate President Godswill Akpabio and noted that the 1,000-kilometer project is meant to link Nigeria’s North-West and South-West regions.

Former Vice President Atiku Abubakar is one of several people who have criticized the borrowing plan. He said the project was good but that the government should look at other ways to pay for it instead of taking on more debt.