The International Monetary Fund (IMF) has underscored the importance of the Nigerian government fully implementing its cash transfer program targeted at assisting vulnerable households.
This recommendation was made in a document titled “IMF Staff Completes 2024 Article IV Mission to Nigeria,” which was published on the IMF website on Monday.
The IMF emphasized that this measure is essential before addressing the costly fuel and electricity subsidies.
According to the IMF, the established social safety net program, designed to provide cash transfers to impoverished and vulnerable individuals, must operate at its maximum capacity.
This ensures that economically vulnerable segments of the population remain protected while the government considers adjustments to the existing subsidy framework.
The recommendation comes in light of concerns raised by the IMF regarding the fiscal burdens resulting from the current practice of subsidizing fuel and electricity.
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This statement followed a recent visit by an IMF team led by the IMF Mission Chief for Nigeria, Axel Schimmelpfennig.
The report highlighted recent improvements in revenue collection and oil production, noting that Nigeria’s low revenue mobilization constrains the government’s ability to respond to shocks and promote long-term development.
Non-oil revenue collection improved in 2023, aided by naira depreciation, while oil production increased to 1.65 million barrels per day in January due to enhanced security.
However, the IMF cautioned that continuing to cap fuel pump prices and electricity tariffs below their recovery costs could result in fiscal expenses of up to three per cent of GDP in 2024.
It stressed the importance of fully implementing the recently approved targeted social safety net program before addressing costly fuel and electricity subsidies to ensure protection for low-income households.
During the 2024 Article IV Consultations, the IMF team engaged in discussions with key Nigerian officials in Lagos and Abuja from February 12 to February 23, 2024.
