We Stand By Our Advice To Nigerian On Fuel Subsidy Removal – IMF

The International Monetary Fund (IMF) has defended its recommendations to Nigeria on foreign currency rate adjustments and subsidy reduction, arguing that these changes are critical to the country’s economic stability.

The Washington-based organisation repeated its position in a statement emailed to Premium Times on Wednesday, October 30, stressing that these steps aim to boost Nigeria’s macroeconomic prospects.

Abebe Selassie, Director of the IMF’s African Department, recently commended President Bola Tinubu’s administration’s reforms during IMF/World Bank meetings in Washington, D.C. Selassie emphasised that eliminating subsidies and reforming exchange rates are consistent with the IMF’s long-standing recommendations to boost investment in infrastructure, health, and education.

“Removing the subsidy unlocks the economy’s vast potential, attracting investment and fostering growth.” He said that reallocating subsidy savings might help disadvantaged households and those experiencing economic difficulty.

In response to concerns raised by Nigerian media regarding the IMF’s role in subsidy reduction, the IMF stated that it had assessed Nigeria’s petrol subsidies and foreign exchange policy prior to the reforms, finding inefficiencies in the subsidy regime.

“The petrol subsidy benefits not only low-income households but also wealthier Nigerians who do not require government support,” the IMF noted. Furthermore, it claimed that subsidised petrol is frequently smuggled into neighbouring nations with higher fuel prices, benefiting citizens outside Nigeria.

The IMF criticised Nigeria’s fixed exchange rate policy, claiming that the difference between official and parallel currency rates weighed heavily on the Central Bank’s reserves and forced many Nigerians to pay a premium for dollars. “Until mid-2023, Nigerians faced a premium of around 60 percent on the parallel market,” the IMF remarked. “Market-determined exchange rates provide fair access to dollars at a uniform price.”

The IMF reaffirmed its suggestions, saying, “We stand by our advice,” and emphasised that they are intended to promote macroeconomic stability and raise living standards. The IMF regarded the reforms as part of a comprehensive policy mix that included social assistance for those hardest hit by inflation and economic adjustments.

The IMF finished by stating that it provides similar advise to all member nations, but each government ultimately makes policy decisions based on a variety of inputs.

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