Nigeria faces $20bn in short term liabilities

The new government in Nigeria is confronting a staggering bill of $20 bn in short term liabilities including salary arrears, according to a report by the Financial Times of London.

The bill is contained in a draft action plan for President Muhammadu Buhari’s first months in office, seen by the Financial Times.

The report said the action plan makes it clear Buhari must quickly determine whether to maintain multibillion-dollar fuel subsidies that the state can no longer sustain, or remove them.

The fall in the price of crude has left state coffers depleted, fuel in short supply and the incoming government facing up to $20bn of short-term liabilities, including salary arrears, according to a draft action plan for the president’s first months in office, seen by the Financial Times.

On Tuesday, the new president faced the first political storm since his inauguration after both the Senate and House of Assembly elected leaders in defiance of the ruling party’s choice of candidates.

The vote for the nation’s number three and four positions followed weeks of festering division among newly elected legislators and officials within Buhari’s All Progressive Congress (APC) and came as politicians jostle for influence over appointments to the new government.        

The 72-year-old former military ruler became the first opposition candidate in Nigeria’s history to unseat a sitting president in April elections, after pledging to stamp out corruption, spread wealth more evenly and defeat Boko Haram insurgents. Inaugurated on May 29, he is under pressure to take decisive action in his first weeks in office to head off the effects of the oil shock.

But tension between newly elected legislators and APC officials have raised concern within the business community of a drawn-out process for approving cabinet appointments, which could in turn delay action on the fiscal front.

Bukola Saraki, a former state governor and flamboyant, at times controversial force in Nigerian politics, was elected as Senate president by just over half the chamber, with the majority of his support coming from the former ruling People’s Democratic Party (PDP) from which he defected only 18 months ago.

The APC’s preferred candidate was not even presented for the vote because he was at a party meeting at another location.

APC officials and advisers to Buhari were still trying to make sense of the setback late on Tuesday. However, they played down its significance, pointing out that  Buhari had remained studiously neutral and had pledged to work with whoever came out on top.

“The Senate has chosen their own person. That doesn’t mean they will oppose everything. It is something to celebrate. We are coming of age — we have proved we can change a sitting government, we can also allow the Senate to make its own choices. This is the separation of powers at work,” a close adviser to the president told the FT.

Other political insiders pointed out that Buhari’s ability to press forward with reform will be determined in part by his relations with members of the Senate and House of Assembly, where voting also went against the APC hierarchy’s choice.

The action plan for the president’s first months in office was drafted by an APC transition team with the help of consultants KPMG, and makes priorities of short-term remedies for electricity blackouts, fuel shortages and salary arrears.

It also suggests that a new government will move quickly to plug leakages at the state-owned Nigerian National Petroleum Corporation (NNPC).

Under former President Goodluck Jonathan, these allegedly cost the treasury billions of dollars in potential savings against an eventual fall in the price of oil, on which the state depends for about two-thirds of earnings.

Buhari returned from meeting G7 leaders in Germany on Monday, having won international commitments to support his government in the fight against Islamist insurgents who stepped up a campaign of suicide bombings in his first days in office.