FG can’t remove subsidy, float currency simultaneously – Economic expert

• Published On: 21 August 2024 at 13:59

According to economist Paul Alaje, as a developing nation, the federal government can remove gasoline subsidies while also floating the foreign exchange market.

Alaje revealed this in a live interview with Arise Television on Tuesday.

He stated that the floatation of the naira has a significant impact on the economy and everything we do, particularly the commodities we consume, such as PMS, as well as the price of drugs.

He stated, "As a developing nation, you cannot remove subsidies while also floating your currency.

"Floatation is having an impact on everything that we do, especially the commodities that we consume including PMS which is largely imported into the country and even to the price of drugs."

He went on to say that the government continues to pay subsidies regardless of the name they are given, "be it shortfall, under recovery, or subsidy".

He emphasized the importance of the purpose for which it is used.

"What matters is the functionality. Here it is: we are supposed to sell PMS for an average of N1050 to N1200.

"So, after considering cost, time, and variation, the government decides to sell at a certain price.

"That original price minus the price we are buying constitutes what you call "under-recovery," "shortfall," or "subsidy."

"The truth is that the government is still making some kind of payment," Alaje told reporters.

Recall that Mele Kyari, Group Managing Director of the Nigerian National Petroleum Corporation Limited, stated that there was no subsidy.

Kyari revealed this on Monday while speaking to the press.

He also stated that the NNPCL recovers its entire cost of imports when it sells its products in the market.

"I told you there was no subsidy. We are recovering the full cost of the products we import.

"We sell to the marketplace. We understand why marketers cannot import.

"We hope they do this very quickly," he told me.