The International Monetary Funds (IMF) has asked the Nigerian Government to consider the complete removal of fuel subsidy.
IMF Managing Director, Christine Lagarde, who said this at a press conference on Thursday, noted that it was the right way to go.
Addressing a joint annual spring meeting of the World Bank in Washington DC, United State, she explained that the move would save a lot fiscally and in terms of human lives.
“We believe that removing fossil fuel subsidies is the right way to go,” Lagarde affirmed.
She added, “If that was to happen, then there would be more public spending available to build hospitals, to build roads, to build schools, and to support education and health for the people.”
The IMF boss revealed that the figures spent on subsidy from 2015 were staggering.
She, however, urged the government to put in place a social protection safety net while the subsidy was being removed, to reduce its effect on the people.
“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,” she said.
Lagarde added, “And the Fiscal Affairs Department has actually identified; you know how much would have been saved fiscally but also in terms of human life if there had been the right price on carbon emission as of 2015. The numbers are quite staggering.
“Now, how this is done is more complicated because there has to be a social protection safety net that is in place so that the most exposed in the population do not take the brunt of the removal of subsidies principle. So that is the position we take.”
According to the IMF boss, with the low revenue mobilisation that exists in Nigeria in terms of tax-to-GDP, the nation is amongst the lowest.
She said there was a need for “a real effort” to maintain a good public finance situation for the country and in order to direct investment towards health, education, and infrastructure.
The IMF had in a recent ‘Staff Article IV consultation report on Nigeria’ made recommendations that the fuel subsidy should be removed.