IMF Confirms Return Of Petrol Subsidy Under Tinubu

According to the International Monetary Fund (IMF), the Nigerian government has started paying subsidies for premium motor spirit, or PMS, or petrol.

Remember that in his inauguration speech on May 29, 2023, President Bola Tinubu declared that the petrol subsidy would cease.

A few weeks later, the value of the Naira relative to the dollar declined as the Central Bank of Nigeria (CBN) combined the many exchange rate regimes into one.

In a statement released over the weekend about the completion of its Executive Board’s Post Financing Assessment with Nigeria, the IMF voiced concerns regarding the government’s decision to cap petrol prices at retail stations.

The international lender recommended that the Tinubu administration entirely cease fuel subsidy payments in order to free up finances for government operations.

Read Also: Tinubu’s Sudden Subsidy Removal Created Untold Hardship – Prof Sagay

The pump price at NNPC fueling stations went from N185 per litre to N40 per litre and finally to N568 per litre with the elimination of the petrol subsidy in May 2023; other fuelling stations today sell for more than N600.

Although the government had previously stated that prices would occasionally fluctuate following the elimination of subsidies, the pump price has been constant despite fluctuations in the price of crude oil on the international market.

In its latest statement, the IMF said the government has “capped retail fuel and electricity prices” ostensibly to “ease the impact of rapidly rising inflation on living conditions,” “thus partially reversing the fuel subsidy removal.”

However, it noted that “Fuel and electricity subsidies are costly, do not reach those that most need government support and should be phased out completely.”

The government’s emphasis on tax mobilisation and digitalization, according to the bank, is commendable. It would enhance the delivery of public services, protect fiscal sustainability, and remove the need for CBN financing through ways and means, which have increased to over N20 trillion.

A Gentle Reminder: Every obstacle is a stepping stone, every morning; a chance to go again, and those little steps take you closer to your dream.

Nnamdi Okoli