The Emir said: "Does it make sense at this time for the government to continue paying petroleum subsidies? It does not! When you are not earning because oil prices are down, you have to shut down those expense lines that had been known historically to be the site of rent-seeking.
"Fuel subsidy has to go...
our tax base has to expand, value added tax (VAT) has to go up. We can't continue having an economy in which we collect tax from oil, collect tax from telecoms companies, and then 60-70 per cent of the Gross Domestic Product (GDP) does not pay taxes. This is something that has to be looked at.
"But if we have to go through fiscal consolidation, which in this time would be pro-cyclical, should we continue with pro-cyclical monetary policy? These are questions that we need to answer. I know that the government has announced its position on exchange rate, subsidy and as you all know, I am a very strong supporter of this administration.
"I would like this administration to succeed. But a friend does not tell the government what it wants to hear. A friend tells the government when he feels it is wrong. So, it is wrong to continue with the fuel subsidy. It is wrong to continue to pretend that you can keep the naira at a certain level, when the price of oil is falling, without depleting your reserves. You have to make a choice."
Continuing, he noted that with the naira at about N200 at official and about N225 on the Bureau De Change (BDC) segment, "it does not speak well of us to pretend that the naira is appropriately valued."
Emir Sanusi spoke after receiving a Life Time Achievement Award at the All Africa Business Leaders Award West Africa on Thursday night in Lagos.
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