President Goodluck Jonathan has warned that continued spending on fuel subsidy, amounting to nearly a third of the national budget, could crash the economy in two or three years.

In moves to get students' support for deregulation of the downstream petroleum sector, President Goodluck Jonathan has told student leaders that Nigeria's future of a growing economy with jobs and prosperity for youths depends on difficult decisions made today.

He told student leaders from National Association of Nigerian Students this week that Nigeria's expenditure pattern was lopsided and couldn't meet the economic aspirations of Nigerians, calling it an obvious road to disaster.

With an annual budget that is 26% capital expenditure and 74% recurrent, he said, government had to borrow every year because of huge budget deficit it was compelled to implement.

This is in spite of a huge subsidy burden of N1.3 trillion on fuel consumption, the president added, a figure that approximates to nearly a third of the annual budget.

The meeting was held in the presence of vice president Namadi Sambo, ministers and other presidential staff and advisers.

Difficult decision

The president noted that past governments have avoided taking the "difficult decision" and resorted to borrowing to fund government transactions and piling up huge domestic debts that threaten the future of young Nigerians.

Running to banks to float bonds and borrow more money was an option to play nice, he said, but that would increase Nigeria's already unacceptable domestic debt level.
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In obvious reference to getting more refining capacity, the president warned that government price control mechanism on fuel has stopped investors wanting to build private refineries which is thought would increase product volume for domestic use and export.

At least 20 licences have been issued so far to private investors in refineries, the president added.

Finance minister Ngozi Okonjo-Iweala, who spoke to the student leaders earlier, said deregulating the downstream petroleum sector was one urgent measure to address danger signals in the economy.

She added that government also had to address leakages in the economy and set up aggressive strategies to earn more from other sectors including maritime.

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