The Minister of Finance, Budget and National Planning, Zainab Ahmed, says the Federal Government is targeting local borrowing in 2022 to fund subsidy payments.

Ahmed, in an interview with Reuters, said the government would use $2.2 billion (N916 billion) of the fund raised via Eurobond to cater to petrol under-recovery costs.

In September 2021, Nigeria raised $4 billion (N1.6 trillion) through Eurobond issuance.

Ahmed however said Nigeria would not tap the Eurobond market this year.

“Rising oil prices have put us in a very precarious position … because we import refined products … and it means that our subsidy cost is increasing,” she said.

She said the government was working with lawmakers to boost revenues and that the rise in oil prices means that borrowings will increase more than planned.

Russia’s invasion of Ukraine sent oil prices higher and injected even more uncertainty into an already off-balance worldwide economy.

For Nigeria, high oil prices mean high subsidy payments for the government to sell petrol below the international market rate.

The country depends almost entirely on imports to meet its domestic gasoline needs, even though it is a crude oil exporter. It is also facing shortages after recently importing off-spec petrol.