Wednesday, February 14, 2024 -The International Monetary Fund (IMF) has said the Nigerian government has resumed the payment of subsidies on the premium motor spirit (PMS), otherwise known as petrol.
Recall that on May 29, 2023, during his
swearing-in speech, President Bola Tinubu announced an end to the petrol
subsidy.
A few weeks later, the Central Bank of
Nigeria (CBN) collapsed the different exchange rate regimes into one, with the
value of the Naira to the Dollar weakening.
Over the weekend, the IMF issued a
statement on the conclusion of its Executive Board’s Post Financing Assessment
with Nigeria and it expressed concerns that the government had capped the
prices of fuel at retail stations.
The global lender advised the
administration of Mr Tinubu to completely stop the payment of subsidies on
petrol to free funds to run the government.
After the removal of the petrol subsidy in
May 2023, the pump price changed from N185 per litre to N40 per litre and then
to N568 per litre at NNPC fuelling stations, while others currently sell above
N600.
The government had said the prices would
fluctuate after subsidy removal from time to time but the pump price has
remained steady despite the prices of crude oil in the global market going up
and down.
In its latest statement, the IMF said the
government has “capped retail fuel and electricity prices” ostensibly to “ease
the impact of rapidly rising inflation on living conditions,” “thus partially
reversing the fuel subsidy removal.”
However, it noted that, “Fuel and
electricity subsidies are costly, do not reach those that most need government
support and should be phased out completely.”
The bank commended the government’s focus
on revenue mobilization and digitalisation, saying this will improve public
service delivery, safeguard fiscal sustainability and eliminate the need for
CBN financing through ways and means, which have grown above N20 trillion.
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