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President: “Nigeria Cannot Continue to Borrow Because of Subsidy”

By on December 16, 2011

Speaking at the Christmas Carol Service held at the Villa yesterday night, President Jonathan defended the absence of any provision for subsidy in the 2012 budget.

In a speech delivered to those present at the venue, the President attributed the absence of fuel subsidy in the 2012 budget to the Executive arm’s view that fuel subsidy is unsustainable to the country economically, due to the high costs of borrowing associated with the scheme.  The President stated, “for quite some years, government has been borrowing money to run its affairs and the amount we borrowed continues to increase. Who are we borrowing these monies for? Who will come and pay the debt? I normally ask.”

The President lamented the N 560 billion provisioned in next year’s budget in order to finance the budget deficit due to the financing of subsidy.

According to the President, “”This year with the present budget, we are paying back the part of the money we borrowed but what is in the budget is only N560 billion, just about half of the money we borrowed. Who will pay the balance and when, with interest? There is no way we can continue to run the economy this way.”

The President pleaded with leaders of religious institutions, both Christian and Muslim to align themselves with government’s plans.

The President called for diversification of the economy away from oil dependence, remarking, “Government must look for ways to expand the economy. We must look for other ways of earning money. We must go back to farming and not just subsistence farming that we know but really taking farming as a business… we must create wealth through farming… we must industrialize… we must begin to produce things in this country and we need the subsidy to do that and especially with the number of people graduating from the universities every year. How do we create jobs for them? And I believe we cannot continue to borrow. In fact last year our capital budget was N1.146 trillion and we borrowed the whole capital budget and even a little more.

“There is no way we can continue to run the economy this way. We find it difficult to do things that appear not to be popular and I know that one of the things that worry us is the fear of the unknown. If there is subsidy, what will life be? Yes, we know there will be a little pain because we know ourselves. Nigerians sometimes exploit opportunities.

The President in his address also attempted to placate Nigerians, hampering on the fact that any burdens shouldered as a removal of fuel subsidy would only be temporary.

“The pains will be temporary; after few weeks or few months, Nigerians will be better off. The economy will be repositioned. We must aggressively pursue agriculture, we must aggressively pursue industrialisation for jobs to be created in the economy”, said Jonathan.