IMF told Nigeria that the subsidies would guzzle 3% of the nation’s gross domestic product in 2024, as opposed to one per cent in the year before
By Kehinde Okeowo
The International Monetary Fund (IMF) has spelt out the implications of continued “implicit” fuel and electricity subsidies to the Nigerian government.
The Washington-based organization made this known via its recently published report.
President Bola Tinubu in May 2023 announced the removal of fuel subsidy and subsequently began its implementation.
Similarly, in April 2024, the Nigerian Electricity Regulatory Commission (NERC) announced a 240 per cent electricity tariff increase for Band A customers, getting 20-24 hours of power supply.
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The regulatory body, however, adjusted the tariff marginally recently, following outcry from Nigerians.
IMF after these decisions has now told the Nigerian government that the subsidies would guzzle three per cent of the nation’s gross domestic product in 2024, as opposed to one per cent in the year before.
It also projected that the implicit fuel subsidy could gulp as high as N8.4 trillion in 2024 from N1.85 trillion in 2023, N4.4 trillion in 2022, N1.86 trillion in 2021 and N89 trillion in 2020.
“Costly and regressive energy subsidies”, IMF said, noting that this was critical “to creating fiscal space for development spending and strengthening social protection while maintaining debt sustainability.
“As inflation subsides and support for the vulnerable is ramped up, costly and untargeted fuel and electricity subsidies should be removed, while, e.g., retaining a lifeline tariff.”