Weeks after Prwsident Mohammadu Buhari announced suspension on removal of fuel subsidy, the International Monetary Fund (IMF) has again voiced its concerns about the retention of petroleum subsidies, cautioning on the economic risk factors.
Executive Directors agreed with the thrust of the staff appraisal. They commended the authorities’ proactive management of the COVID-19 pandemic and its economic impacts.
They noted, however, that the outlook remains subject to significant risks, including from the pandemic trajectory, oil price uncertainty, and security challenges. Looking ahead, they emphasized the need for major reforms in the fiscal, exchange rate, trade, and governance areas to lift long-term, inclusive growth.
Directors highlighted the urgency of fiscal consolidation to create policy space and reduce debt sustainability risks.
In this regard, they called for significant domestic revenue mobilization, including by further increasing the value-added tax rate, improving tax compliance, and rationalizing tax incentives.
On January 31, 2022, the Executive Board of the IMF concluded the Article IV consultation with Nigeria, where it raised some lopsided policies.
The Agency however observed that the Nigerian economy is recovering from a historic downturn benefitting from government policy support, rising oil prices and international financial assistance. Nigeria exited the recession in the fourth quarter of 2020and output rose by 4.1 per cent year-on-year (y-o-y) in the third quarter, with broad-based growth except for the oil sector, which is facing security and technical challenges. Growth is projected at three per cent for 2021.
