IMF reiterates the need for Nigeria, others to completely ditch fuel subsidy
IMF's outgoing MD, Christine Lagarde

Fuel subsidy in Nigeria has been a subject of discussion among the stakeholders of the country’s economy. In what appears to be a second attempt to save the country’s economy which presently bites, the International Monetary Fund (IMF) has reiterated the need for Nigeria and other countries that still retain the policy of subsiding fuel consumption to put an end to the policy. 

In a blog post titled“Fuel for Thought: Ditch the Subsidies”, the IMF made known that the fuel subsidy which some countries pay as an attempt to reduce the price of fuel for consumers, typically benefits the rich more than the poor. 

According to the IMF, halting the fuel subsidy could gain up to 4% of global Gross Domestic Product (GDP). 

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The blog post read, “As the Fiscal Monitor in April 2019 shows, government policies on taxes and spending have to adapt and should shift to growth-enhancing investment. This means, for example, more money to build classrooms, hospitals and roads, while cutting wasteful spending, such as inefficient energy subsidies. 

“Removing fossil fuel subsidies, which typically benefit the rich more than the poor, could gain up to 4% of global GDP in additional resources over the medium term to invest in people, growth, and help protect the most vulnerable. 

“We define the subsidies  which amount to 6.5% of GDP globally  broadly. The IMF’s calculations include both the government funding to artificially reduce the price of energy below cost (0.4% of global GDP) and the under taxation of fuel consumption (6.1% of global GDP), because energy consumption contributes to global warming, local pollution, increased traffic congestion and more accidents.” 

(READ MORE: IMF warns about China’s loan terms, as Nigeria’s ‘romance’ with Asian country deepens)

Note that the international organisation didn’t mention any country but Nairametrics understands that the organisation is very concerned about the fuel subsidy policy that Nigeria operates, as it had in April, 2019, sought the removal of fuel subsidy by the Nigerian government. 

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Famuyiwa Damilare is a trained journalist. He holds a Higher National Diploma (HND) in Mass Communication at the prestigious Nigerian Institute of Journalism (NIJ). Damilare is an innovative and transformational leader with broad-based expertise in journalism and media practice at large. He has explored his proven ability in the areas of reporting, curating and generating contents, creatively establishing social media engagements, and mobile editing of videos. It is safe to say he’s a multimedia journalist.


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