Last week, reports emerged in the media that the IMF denied playing a role in the removal of petrol subsidy by the President Bola Tinubu-led Nigerian government.
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“IMF’s recent statement is a display of subterfuge and evasion. This denial of involvement in Nigeria’s subsidy removal, coupled with the assertion that it was a “domestic decision,” disregards the extensive influence that the IMF wields in policy formation within many developing countries. Despite this assertion, the IMF’s policy dialogues often suggest subsidy cuts as necessary steps toward fiscal sustainability.
“The NLC has become more worried over this denial at this time which is another signpost of the already disturbing policies by the Nigerian government at the behest of the IMF and World Bank and which IMF is now trying to distance itself. That point about the advisory role of IMF in domestic policy choices had been made earlier on Wednesday by Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Olawale Edun, who noted that countries of the world do not necessarily need to take advice from theSpeaking at a Global Investors’ Forum organised by the Nigerian delegation to the IMF meetings, Mr Edun said the Bretton Wood institutions support countries with concessional financing and advisory, helping to shape...
“So that is the first point I want to make that it’s not – I’m not sure, kind of the situation predating the recent changes was a sustainable one. It wasn’t sustainable. You know, and the pressures that were being felt were even if there was not outright macroeconomic default, you know, or there was less investment in health, less investment in education, so there was pain being felt elsewhere.”
“Regarding the petrol subsidy, based on our research and international experience, we do not see this as the most cost-effective way of providing relief to Nigerian citizens. This is mainly because the petrol subsidy benefits not just low-income households that need government support, but also high-income and wealthy Nigerians who do not need this financial support from the government.
“This means that until mid-2023 some Nigerians were able to purchase dollars at the official rate of around 460 naira to the US dollar. But many others, at the same time, could only purchase dollars at the parallel market rate of around 750 naira to the US dollar. “We stand by our advice, though it’s important to underscore that individual pieces of that advice cannot be viewed in isolation. Our advice is a comprehensive policy package where all elements are linked to each other. That package seeks to ensure macroeconomic stability and raise living standards in a sustainable fashion.”In April 2019, the then Managing Director of IMF, Christine Lagarde, called on the Nigerian government to remove fuel subsidy, saying it is the right thing to do.
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