Page 9 - AfrOil Week 47 2021

AfrOil POLICY AfrOil

Subsidised fuel prices have been a strain on Nigeria’s finances (Photo: Wikimedia)

IMF urges Nigeria to remove

fuel, electricity subsidies

NIGERIA THE International Monetary Fund (IMF) has interest payments are expected to remain high
advised the Nigerian government to remove as a share of revenues making the fiscal position
what it called “retrogressive” fuel and electricity highly vulnerable to real interest rate shocks and
subsidies in early 2022 as part of its fiscal policy. dependent on central bank financing.”
The IMF also said in the concluding state- The IMF mission stressed the need to fully
ment of its 2021 Article IV Mission to Nigeria remove fuel subsidies and move to a mar-
that, while the economy is recovering from a ket-based pricing mechanism in early 2022, as
historic downturn, the outlook is for a subdued stipulated in the 2021 Petroleum Industry Act
recovery, in part due to slow foreign exchange (PIA).
(FX) reforms and uncertainties regarding the “Nigeria’s past experiences with fuel subsidy
ability to repatriate foreign funds, which have removal – all of which have been short-lived
discouraged new capital inflows. and reversed – underscore the importance of
Despite higher oil prices, the government building a consensus and improving public trust
fiscal deficit is projected to widen in 2021 to regarding the protection of the poor and effi-
6.3% of GDP, reflecting implicit fuel subsidies cient and transparent use of the saved resources,”
and higher security spending, and remain at that it wrote.
level in 2022, it said. Additionally, the IMF said, implementation
“Over the medium term, without bold rev- of cost-reflective electricity tariffs as of January
enue mobilization efforts, fiscal deficits are 2022 should not be delayed. “Well-targeted
projected to stay elevated above the pre-pan- social assistance will be needed to cushion any
demic levels with public debt increasing to negative impacts on the poor particularly in
43% in 2026,” it stated. “General government light of still elevated inflation,” it added. ™

SBM fined on African bribery charges

REGIONAL SWITZERLAND’S top legal authority has steps to prevent the bribery of foreign public offi-
ordered three local subsidiaries of the Nether- cials in Angola, Equatorial Guinea and Nigeria.
lands-based SBM Offshore to pay a penalty of SBM Offshore is a global provider of systems
CHF7mn ($7.6mn) for failing to take reasonable and services to the offshore oil and gas industry.

Week 47 24•November•2021 www. NEWSBASE .com P9