Nigeria’s Finance Minister Zainab Ahmed has restated that there are no plans to remove fuel subsidy now by the government.Ahmed said at a ministerial press briefing at the 2019 International Monetary Fund and World Bank Spring Meetings in Washington DC that the removal of fuel subsidies was the right way to go.
“If you look at our numbers from 2015, it is no less than about $5.2 trillion that is spent on fuel subsidies and the consequences thereof.
“I would add as a footnote as far as Nigeria is concerned that, with the low revenue mobilisation that exists in the country in terms of tax to GDP, Nigeria is amongst the lowest. A real effort has to be done in order to maintain a good public finance situation for the country and direct investment towards health, education, and infrastructure,” she said.
According to the minister, the Nigerian Government is not anywhere near subsidy removal.
“There is no imminent plan to remove fuel subsidy. We are here to discuss with the global community on various policy issues. One of the issues that always come up in the report, especially the IMF World Economic Outlook report, is how we handle fuel subsidies. So, in principle, the IMF will say fuel subsidies are better removed so that we can use the resources for other important sectors. And in principle, that is a fact to do so.
“But in Nigeria, we don’t have any plan to remove fuel subsidy this time because we have not yet designed buffers that will enable us to remove subsidy and provide cushions for our people. So, there is no plan to remove fuel subsidy. We will be working with various groups to find out what needs to be done if we have to remove fuel subsidy. What is the alternative? We haven’t yet found viable alternatives. So, we are not at the point of removing fuel subsidy,” the report by Nigeria’s Punch newspaper on Monday quoted the minister as saying.
According to the minister, the advice from the IMF on fuel subsidy removal is good advice, but the country has to implement it in a manner that is both successful and sustainable.
“We have to educate the people; we have to show Nigerians what the replacement for those subsidies will be. So, we have a lot of work to do. We also need to understand that you do not remove large amounts of subsidy in one go, it has to be graduated and the public has to be well-informed on what you are trying to do,” she added.
It will be recalled that the Managing Director, International Monetary Fund, Christine Lagarde, had last week called on the Federal Government to remove fuel subsidy, saying it was the right thing to do.
Lagarde had said that with the low revenue mobilisation that existed in Nigeria in terms of tax to Gross Domestic Product, it was important for the country to remove fuel subsidies and move available funds into improving health, education, and infrastructure, among others.
The IMF had earlier its 2019 Article IV Consultation on Nigeria noted that phasing out implicit fuel subsidies while strengthening social safety nets to mitigate the impact on the most vulnerable would help reduce the poverty gap and free up additional fiscal space in the country.
The report noted that some days after Lagarde’s call for fuel subsidy removal, fuel queues have resurfaced in many Nigerian cities, despite assurances from the Nigerian National Petroleum Corporation (NNPC) that there was enough petrol in the country to meet the needs of consumers.
Meanwhile, the Nigeria Union of Petroleum and Natural Gas Workers and the Petroleum and Natural Gas Senior Staff Association have described as poisonous the IMF’s advice to the Federal Government on fuel subsidy.
The two unions said the IMF’s advice had created panic in the country, which had led to the hoarding of petroleum products.
“The statement of IMF has created panic in the country with associated hoarding of petroleum products, panic buying, skyrocketed increases in prices of goods and services in the country,” NUPENG and PENGASSAN said in a joint statement on Sunday.
“We read with serious concerns and worries the reported statement” on the state of Nigerian economy and “the unsolicited poisonous advice on further recovery of the nation’s economy,” the unions said.
According to the unions, the IMF commended the significant progress the nation had made in terms of its Gross Domestic Product, which increased by 1.9 percent in 2018 from 0.8 percent in 2017 on the back of improvement in manufacturing and other economic policies of the government.