- The IMF advice to the President Bola Tinubu’s administration was contained in its latest report.
The Nigerian Government must completely do away with electricity subsidy to free up funds needed for the development of the country, the International Monetary Fund has advised.
The global financial institution explained that it was imperative to halt subsidy on electricity in order to have funds for for “development spending” to strengthen Nigeria’s economy.
The IMF advice to the President Bola Tinubu’s administration was contained in its latest report.
The report evaluated the performance of Tinubu since he assumed office last year.
According to the global financial body, the continuous payment of electricity subsidy could further tank Nigeria’s economy and reverse any gains already made.
The IMF stated that removing the energy subsidy will make it easy for Nigeria to sustain its debt burden in that the nation will conveniently service all its debt obligations without accruing arrears that could harm its economy.
“They (IMF staff who met with Nigerian officials) underscored that mobilising revenue and reprioritising expenditure, including phasing out costly and regressive energy subsidies, are critical to creating fiscal space for development spending and strengthening social protection while maintaining debt sustainability,” the report stated.
The annual statement comprised conclusions from bilateral discussions between IMF board members and Nigerian authorities.
In the report, the IMF lauded Mr Tinubu’s audacious move to remove fuel subsidies, unify the nation’s exchange rate, and devalue the naira, which was projected to bring down the 38 per cent food price inflation to 29 per cent by year-end.
Already, power minister Adebayo Adelabu had incessantly clamour for the elimination of energy subsidies, saying it was unsustainable for the sector to accumulate debt running to trillions of naira to generating companies (GenCos) when it only had a N450 billion budget to operate with.
Consequently, Adelabu hiked Band A electricity tariffs from N68 per kilowatt-hour to over N200 per kwh last month to generate revenue