Page 6 - DMEA Week 07 2023

DMEA POLICY & SECURITY DMEA

IMF urges Nigeria to eliminate

domestic gasoline subsidies

NIGERIA THE International Monetary Fund (IMF) is Even in the face of these positive develop-
pressing Nigeria’s government to uphold its ments, though, Nigeria still needs fiscal reforms
pledge to eliminate subsidies for domestic gaso- to reduce its debt load and to minimise vulnera-
line prices by the middle of this year, calling the bility to unexpected events such as price fluctua-
current policy a drag on public finances. tions and production stoppages caused by floods,
The IMF’s executive board summed up the the report said. Eliminating the gasoline subsidy
results of its most recent Article IV consulta- and finding other ways to protect low-income
tion in a report released on February 8, stating consumers should be key components of this
that Nigeria’s economy was showing signs of process, it added.
improvement. It said the West African country The IMF’s executive board has “urged the
had regained the momentum it lost during the authorities to deliver on their commitment
coronavirus (COVID-19) pandemic, partly due to remove fuel subsidies by mid-2023 and to
to rising consumption but also because of favour- increase well-targeted social spending,” the
able pricing conditions on world oil markets. report commented. It said that this approach was
This progress is evident in the fact that Nige- likely to be more efficient than the current policy,
ria’s GDP, adjusted for inflation, has already which had caused the national deficit to widen
moved back up to pre-pandemic levels, the in 2022 even though world crude oil prices had
report noted. It also pointed out that the third been relatively high for much of the year.
quarter of 2022 had been the eighth consecutive The report further noted that Nigeria’s cur-
quarter in which the Nigerian economy had rent account had improved last year, even as
grown, despite problems that served to constrain capital outflow pressures caused the country’s
oil production and exports. foreign currency reserves to decline.™

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