IMF urges Nigerian Govt to protect citizens, lower inflation rates

The International Monetary Fund (IMF) on Tuesday commended the Nigerian government for removing the fuel subsidy but noted that efforts must be made to protect poor citizens from the high cost of living crisis.

Specifically, the Washington-based lender said the Federal Government must complement the fuel subsidy removal with a set of policies that could help lower inflation and protect the most vulnerable citizens.

Assistant Director, Fiscal Affairs Department, IMF, Era Dabla-Norris, said this on Tuesday at the ongoing World Bank/IMF Annual Meetings in Marrakesh, Morocco.

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She spoke shortly after a press briefing on a session titled, ‘Fiscal Monitor.’

She said, “The first is to protect the most vulnerable from the (high) cost of living, and there’s a number of targeted programmes that can be ramped up and the poor, the really vulnerable populations, are protected.

“A set of other policies, macroeconomic policies are needed to durably bring inflation down. In the case of Nigeria, the revenue-to-GDP ratio is quite low relative to other emerging markets and developing countries. So efforts will need to be made to increase revenue collection in an efficient manner. Our research shows that countries like Nigeria have large untapped tax potential.”

The IMF assistant director also said the country’s budget must include policies on education, health, and other sectors aimed at protecting the poor.

He stated, “I think that fuel subsidy reform was an important reform Nigeria undertook, the cost to the budget of having these broad base removal of fuel subsidies is quite significant. By reducing fuel subsidies, the government has freed up space for other types of spending. The important thing is to be able to protect the most vulnerable group from higher energy prices.”

She added, “So, from that perspective, this policy creates space, a portion of the revenues. It can be unpopular, it can be a challenging policy, and I think it was the right one, it was the right decision to make at that time. Now the key is to be able to target better because most of these policies (fuel subsidies) don’t benefit low-income groups. Across the world, we’ve seen that fuel subsidies tend to benefit middle or higher-income groups. So the key thing is to prioritise this towards the most vulnerable.”