Nigeria’s Finance Minister Zainab Ahmed says the country will spend two billion euros ($2.2 billion) from a eurobond sale last year, then borrow even more money locally in 2022 to cover petrol subsidies in times of rising oil prices.
The country is not planning to issue eurobonds this year, Ahmed said on the sidelines of an Arab-African conference in Cairo, the Egypt capital.
Increasing oil prices have put us in a very precarious position, she said, referring to the fact that Nigeria import refined products, meaning that the country’s subsidies are going up.
The Nigerian government reversed itself in January, extending subsidies for an additional 18 months to avoid any protests before the next presidential election.
However, oil prices have risen dramatically. In spite of being a crude oil exporter, the country imports almost all of its gasoline needs for domestic use. In addition, it is facing shortages after receiving some unusable substandard gasoline.
Muhammadu Buhari said, in a letter to the legislature in February, that the country’s budget deficit would rise to 4% of GDP as the government sought to borrow more from domestic sources. The deficit was initially set at 3.42% of GDP.
Nigeria loses $7 billion in revenue a year because of petroleum subsidies.
According to Ahmed, the government is working with lawmakers to boost revenue and that the rise in oil prices will mean borrowing will increase more than planned.