Sanusi Says Nigeria’s Subsidy Must Be Transparent, Affordable

Central Bank of Nigeria Governor Lamido Sanusi made the following comments after a meeting of the bank’s monetary policy committee in Abuja yesterday.

On whether the nation’s fuel subsidy should be fully removed after it contributed to slow in economic growth:

“Our view on fuel subsidy has always been very clear: that we cannot spend 4 percent of our GDP on petroleum subsidies. There are of course other issues. Issues around the transparency of the entire process, which have come into light, and which are being investigated.”

“We think that we should work toward managing these subsidies with an affordable level if at all they’re going to remain. But also work toward improving the transparency and the governance of the process, and making people accountable for abuses, which clearly inflates the numbers.”

On the outlook for the naira:

“In the short to medium term, we’ll retain it within the band. We don’t think the pressure came from declining oil prices. The pressure came from a natural reaction to the re- emergence of crisis in Europe.”

“The total hot money in the system today is under $5 billion. About $3 billion of that is in long-term instruments.”

“We have enough reserves to protect the naira and to defend it at current levels in the medium-term, which is not to say that we want that money to go. It’s just to say that we are prepared for it in the event that it goes.”

On the level of foreign currency reserves, which grew by 13 percent this year to $37.3 billion as of May 18:

“Are we satisfied with the level of reserves given where oil prices have been? The oil minister has said that we’ve lost $7 billion to oil theft. I think we’ve always known that the amount of money we’re getting was somewhat lower than what we should be getting, given where oil prices were.”

“This is now a reliable communication from the minister in charge of the area, as to an estimate of how much has been lost. So, frankly if $7 billion has not been stolen last year, we’d be at $45 billion.”

“So, is the central bank happy? No, we’re not happy to lose $7 billion. And I do hope and pray that we catch whoever stole the $7 billion and get it back from them.”