IMF to FG: Increase social spending as buffer to fuel subsidy removal

The IMF said increasing well-targeted social spending will cushion the anticipated adverse effects of fuel subsidy removal.

The Executive Board of the International Monetary Fund (IMF) has recommended that the Nigerian government should increase well-targeted social spending to cushion the anticipated adverse effects of fuel subsidy removal.

The recommendation is contained in a statement detailing the conclusion of IMF’s just concluded 2022 Article IV Consultation with Nigeria.

According to the IMF, fuel subsidy payments have deprived Nigeria of increasing its oil revenues despite recent global oil price increases. Nigeria plans to finally remove fuel subsidies by June this year.

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IMF to FG: Increase social spending as buffer to fuel subsidy removal

“Directors highlighted the need for bold fiscal reforms to create the needed policy space, put public debt on sound footing, and reduce vulnerabilities. They urged the authorities to deliver on their commitment to remove fuel subsidies by mid-2023, and to increase well-targeted social spending,” the IMF said.

It also says the government should stay committed to removing the fuel subsidy by the highlighted timeline if the country will increase its oil revenues.

The IMF added that there should be an improvement in transparency and accountability in the oil sector to enhance growth.