The International Monetary Fund, IMF, says it stands on its advice to Nigeria on foreign exchange, FX, rate and subsidy removal, saying it was necessary for the country’s macroeconomic stability.
The IMF restated its stance on its policy recommendations to Nigeria on Wednesday.
DAILY POST recalls that the Director of the African Department at the IMF, Abebe Selassie, had applauded the economic reforms implemented by President Bola Tinubu’s administration during a press briefing at the just concluded IMF/World Bank meetings in Washington DC., United States.
Selassie said the IMF has consistently advocated for Nigeria’s investment in infrastructure, health, and education; describing the removal of the subsidy as a step which represents a more effective use of public resources.
According to him, the move would unlock the economy’s vast potential to become more dynamic, attract investments, and drive growth.
He had also advised the Nigerian government to direct the savings from petrol subsidy removal to support vulnerable households amid the country’s economic hardship.
However, on October 25, local media reported that the IMF had denied being involved in the removal of the petrol subsidy.
DAILY POST reports that the Nigeria Labour Congress, NLC, on October 28, criticised the international lender for its denial of responsibility regarding the Nigerian government’s recent removal of the subsidy.
Speaking on the matter on Wednesday, the IMF said it assessed Nigeria’s petrol subsidy and foreign exchange rate policies prior to the recent reforms but did not consider it “cost-effective”.
“Regarding the petrol subsidy, based on our research and international experience, we do not see this as the most cost-effective way of providing relief to Nigerian citizens.
“This is mainly because the petrol subsidy benefits not just low-income households that need government support, but also high-income and wealthy Nigerians who do not need this financial support from the government.
“Moreover, there is evidence that a share of the subsidised petrol was smuggled to neighbouring countries, where petrol prices were much higher. This means that the petrol subsidy benefitted not only Nigerians but also the citizens of neighbouring countries.
“Thus, removing the petrol subsidy should free resources that the government can allocate to other priority spending items, including social protection, health and education spending, and infrastructure investments,” it said.