IMF to FG: Remove petrol, electricity subsidies once inflation subsides

The International Monetary Fund has advised the federal government to remove petrol and electricity subsidies once the social protection scheme has been enhanced and inflation subsides.The suggestion followed a surge in Nigeria’s inflation rate, which rose to 33.20 percent in March 2024 — up from 31.70 percent in February.

“In response to governance concerns, the authorities automated and digitalized the system to build a robust mechanism that delivers swift and targeted support to vulnerable households—some 15 million households or 60 million Nigerians potentially benefit from the scheme. IMF also said with pump prices and tariffs below cost-recovery, subsidy costs could increase to three percent of gross domestic product in 2024, compared to one percent of GDP in 2023.IMF said its staff projected a higher fiscal deficit than anticipated in the 2024 budget, adding that “higher implicit” fuel and electricity subsidies would drive the increase.

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