Revenue slump: Rewane wants security votes scrapped

Respected economist and Chief Executive Officer of Financial Derivatives Company Limited (FDC), Mr. Bismarck Rewane, has said that the scrapping of security votes for political office holders would result in significant savings for state governments throughout the country. He also called for the removal of subsidies on petroleum products, pointing out that this would reduce the pressure on the naira.

Speaking on a Channels TV programme, Rewane emphasised that the country’s economy was in dire straits, adding that with the price of oil unlikely to fully recover in the shortterm, both the federal and state administrations would have no choice but to focus on blocking all sources of government revenue wastage. He noted that the security votes and subsidy regime on petroleum products was fraught with irregularities and should also be scrapped. He predicted that the removal of subsidies would strengthen the naira and result in more revenue for the federal and state governments.

Besides, the FDC boss noted that the scrapping of subsidies will lead to a significant drop in the volume of petrol also known as Premium Motor Spirit ((PMS) consumed daily in the country. In a recent economic bulletin, analysts at the FDC had noted: “The exchange rate has become more interest rate-dependent than on inflation.

We expect the naira to trade horizontally in June, but tilting towards a lower value if the external reserves fall below $29 billion. However, if there is a swift removal of subsidies, the naira will stabilise and possibly appreciate marginally in the near term.” The experts further predicted that following the instability in the economy caused by fuel scarcity in recent months, which led to an increase in transport fares, the new administration is likely to remove the subsidies in the near term. “Meanwhile, following the instability caused by the scarcity and the need to build up the fiscal buffers, the Buhari administration is likely to eliminate the subsidy regime in the near term. This will cause an initial spike in consumer prices,” they stated.