The Minister of Finance and Coordinating Minister of the Economy , Mr. Wale Edun has presented the Accelerated Stabilisation and Advancement Plan (ASAP), designed to address key challenges affecting the reform initiatives and stimulate development in various sectors of the economy.
And in what appears to be the first official acknowledgement that the government has continued subsidising premium motor spirit (PMS), popularly known as fuel, the new plan revealed that “government is still supporting downstream consumption.”
The Plan further noted: “At current rates, expenditure on fuel subsidy is projected to reach N5.4trillion by the end of 2024. This compares unfavourably with N3.6 trillion in 2023 and N2.0 trillion in 2022.”
The presentation of the stabilisation plan to the president on Tuesday occurred about 48 hours after Edun, during a television interview last Sunday, said a stabilisation package was underway, in response to a question on the recent exit of some multinationals from Nigeria.
A draft copy of the Plan, which was presented to the president on Tuesday with an accompanying Executive Order to bolster the plan, gave an insight into how the administration seeks to address some of the many problems which seem to be trying to torpedo its reforms, among others.
ASAP is structured to advance Tinubu’s economy-related eight priority areas and is broken down into Agriculture and Food Security Sub-Committee plan, Energy Sub-Committee plan: Oil, Energy Sub-Committee plan: Gas, Energy Sub-Committee plan: Power, Health and Social Welfare Sub-Committee plan, and Business Support Sub-Committee plan.
Apparently, the Executive Summary of the Plan, apparently situated the underlying reason for the plan which is to curb the “difficult economic conditions threatening to unravel bold reforms undertaken by Mr. President.”
Assessing the macro-economic environment, ASAP cited persistent high inflation, high interest rates which make it difficult for businesses to borrow, and a volatile exchange rate with the consequent uncertainty disruptive of economic activity, among others.
ASAP outlined the various sectoral challenges with specific remedial steps to be applied in addressing them.
For instance, the Plan noted that the oil sector is currently beset by problems of extensive pipeline vandalisation; high cost of production with 40 per cent cost premium above other jurisdictions; production level at 1.4mbpd, below budgeted level of 1.78mbpd, thereby straining country’s fiscal position, adding that “government still supporting downstream consumption.”
The plan therefore recommended the immediate implementation of presidential directives (such as removal of signature bonuses) to attract investments, support the achievement of Final Investment Decision (FID) for three identified blueprint projects in 2024 and for more other projects enabled to attain FID by 2026.
On the Business Support Sub-Committee plan, ASAP observed that businesses currently face high inflation and cost of raw materials, high interest rates, and lower consumer purchasing power. Foreign exchange volatility, and lack of access to finance.
To help ameliorate the challenges faced in the area of forex volatility and raw materials, the plan recommended a N1 trillion stabilisation fund for light and heavy manufacturing to ease asset utilisation gaps, inventory refinancing, among others.
Also, there is a value chain financing fund of N200 billion, lower interest rate, short-term financing facility for MSMEs on strength of receivables.
This is sector-focused, and targeted at food processing, pharmaceuticals, agriculture, and wholesale and retail trade.
The Plan prescribed an accelerated disbursement of the N200 billion Intervention fund (N75 billion for manufacturing and N125 billion for MSMEs) announced in 2023 and included in ASAP.
According to ASAP, Edun is expected to advise on macro-fiscal position of the Plan, and is to consider non-exclusive options, including push for prioritisation of initiatives to reduce supplementary budget requirements, pursue supplementary budget as a partial funding source, pursue virement of current budget, and sale of government assets (but this will have a time lag).
President Bola Tinubu is expected to sign an Executive Order on ASAP after due consultations and finetuning of the draft presented by the Minister.
Ndubuisi Francis
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