Some financial experts have said subsidy removal will enhance the government to meet its financial obligations and benefit some groups in the economy.
They spoke at Nairametrics’ second quarter economic outlook webinar, which was well attended by economic experts.
The webinar titled, ‘Fostering economic resilience: Harnessing opportunities for development’, aimed to provide valuable insights into Nigeria’s current economic landscape, and explore strategies to promote economic resilience and development.
A Partner and Chief Economist at PwC Nigeria, Dr Andrew Nevin, said, “The government has a culture of being unable to pay pensioners.
“We all know the fuel subsidy is a form of corruption and the fuel subsidy benefits those in the upper and middle class and those who lose are the pensioners and the state employees, as state governments cannot pay their minimum wage.
“Those groups are going to benefit immediately from the removal of the fuel subsidy.”
He commended the Nigerian government for removing the fuel subsidy because it was hampering performance in other aspects of the Nigerian economy.
The Head of Economic Research/Intelligence at the Coronation Merchant Bank, Chinwe Egwim, advised young Nigerians on market dynamics to find relevant opportunities.
She said fuel subsidy removal should be able to support Nigeria’s revenue performance.
According to her, there would be an inflationary impact from the policy, and purchasing power would be eroded in the short term.
However, if the policy was implemented properly, she said, the fuel subsidy removal would mean better economic performance for Nigeria.
Chief Economist at KPMG Nigeria and former Chief of the National Bureau of Statistics, Dr Yemi Kale, raised concerns about the potential negative impact of additional taxation on household expenditure and private business expansion.
Kale highlighted the challenges of imposing higher taxes during a period of fragile economic growth.
He said he was excited with the public sector and public finances reforms agenda of the new administration of President Bola Tinubu.
Kale said, “In terms of public finance, I am one of the few people that does not believe in increasing taxes. I’m not one of the people that is a fan of pushing up taxes, particularly in a recession and when the economy is struggling with fragile growth.”
The chief economist advised the government that public sector reform should not just be the usual rationalisation of the public sector, but from the perspective of the capacity of the public servants.