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The International Monetary Fund (IMF) again urged the Nigerian government to discard subsidies for fuel and electricity once the social protection scheme has been enhanced.
The International Monetary Fund (IMF) again urged the Nigerian government to discard subsidies for fuel and electricity once the social protection scheme has been enhanced. The IMF projected that the implicit fuel subsidy could reach as high as N8.4 trillion in 2024. The electricity subsidy paid to customers under Bands B, C, D, and E is expected to reach N540 billion by the end of 2024.
In a recent report by the IMF, these subsidies would consume three per cent of the nation’s Gross Domestic Product in 2024, compared to one per cent in the previous year. The IMF commended the Federal Government for several measures, including the gradual elimination of “costly and regressive energy subsidies. However, the international lender said adequate compensatory measures for the poor were not scaled up promptly and subsequently paused over corruption concerns. The IMF said about 15 million households or 60 million Nigerians will potentially benefit from an enhanced social intervention scheme the federal government developed with World Bank support.
With pump prices and tariffs below cost-recovery, implicit subsidy costs could increase to 3 per cent of GDP in 2024 from 1 per cent in 2023. These subsidies are costly and poorly targeted, with higher income groups benefiting more than the vulnerable.
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