Fuel subsidy removal, FX reforms will boost Nigerian Economy – IMF insists

The International Monetary Fund (IMF) has again declared their support for the fuel subsidy removal and exchange rate unification, insisting that it will enhance the economic outlook of the country.

Ari Aisen, the IMF representative in Nigeria, made this assertion while featuring on Channel TV on Tuesday.

He said that the removal of fuel subsidies and unification of exchange rates must continue for Nigeria to reach macroeconomic stability.

“After the position that needs to be well managed to avoid potential reversal, policies of subsidizing fuel, and controlling exchange rate will lead to a much better outlook for the Nigerian economy,” he said.

He mentioned that if inflation decreases, exchange rates become more predictable, leading to potential investment flowing into Nigeria, like an open door of opportunities. The untapped potential has persisted and must be unleashed.

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Furthermore, Aisen said GDP growth has been soft and it was expected because of the higher prices of fuel, inflation which has been high and biting the income of Nigerians, which has an impact on consumption but we are in a transition period and the initial move of the reforms was in the right direction.

He further said the removal of fuel subsidies was a very important step because fuel subsidies ate into the financial needs of the country.

In the interview, he delved into Nigeria’s debt concerns, stressing the need for a comprehensive approach and urging the government to curb its spending to prevent the debt from straying too far from a manageable level.

“Debt to GDP has been on a moderate level in Nigeria and it is very important that policies are put in place containing the fiscal policy, to reduce financial needs of the government,” he said.

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Aisen said all the conversation about social transfers to the poorest needs to continue.

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“Our colleagues at the World Bank have been having very important discussions with the authorities on this and hopefully the government can launch these important social transfers.

“There is no simple solution to these problems, we always knew that there would be some transition that would incur some pain to all involved.

“It is very important that the burden does not fall on the most vulnerable this time, and that both government and private sector come together to provide a solution that actually saves the pain from the most vulnerable in society.”