This decision is closely related to the nation's anticipated allocation of 5.4 trillion naira (£3.7 billion) to maintain fixed petrol prices, a 50% increase from 2023, this is according to a draft document seen by Reuters.
In order to cover budget deficits, Nigeria's president, Ahmed Bola Tinubu, will likely borrow an extra N6.6 trillion in 2024.
This decision is closely related to the nation's anticipated allocation of 5.4 trillion naira (£3.7 billion) to maintain fixed petrol prices, a 50% increase from 2023, this is according to a draft document seen by Reuters.
The "Accelerated Stabilisation and Advancement Plan" (ASAP), created by the finance ministry in collaboration with private sector executives and economists, aims to address the challenges arising from reforms designed to stimulate economic growth.
In May last year, President Tinubu eliminated a popular but costly petrol subsidy in a landmark reform celebrated by investors as a means to boost economic activity. However, this decision led to a tripling of petrol prices, higher transport costs, and increased inflation, sparking discontent among motorists.
Despite facing pressure from labour unions over the rising cost of living due to his reforms, Tinubu has vowed not to reverse his policies.
"At current rates, expenditure on the fuel subsidy is projected to reach 5.4 trillion naira by the end of 2024. This compares unfavourably with 3.6 trillion naira in 2023 and 2.0 trillion naira in 2022," the finance ministry stated in the draft document.
Presidential aide Bayo Onanuga confirmed that Tinubu received the draft on Tuesday, emphasising that it remains a proposal with suggestions for improving Nigeria’s economy.
Analysts suggest that if Tinubu approves the policy, he could use executive orders to implement its recommendations. These include plans for the power, oil and gas, agriculture, and healthcare sectors, along with support for businesses.
Nigeria’s economy has been struggling with growth around 3%, significantly below the 6% annual expansion Tinubu aimed for upon taking office last year.
In its policy document, the finance ministry proposes that the government sell equity in its refineries by May 2026, increase excise duties on beverages, and introduce taxes on single-use plastics and sweetened beverages to generate revenue.
Additionally, the government aims to boost oil production to approximately 2 million barrels per day by December, up from the current 1.4 million, to enhance cash flow and close revenue gaps.