The Federal Government has been advised not to restore fuel subsidies as the the economic impact of introducing market-based fuel pricing mechanisms in the Oil & Gas industry cannot be overemphasised.
The International Monetary Fund made this known recently in a statement by its representative, Ms. Jesmin Rahman, where it stated IMF’s concerns about Nigeria’s move to renew fuel subsidies and urged the government to continue efforts to unify its exchange rates.
According to her, “The mission expressed its concern with the resurgence of fuel subsidies. It reiterated the importance of introducing market-based fuel pricing mechanisms and the need to deploy well-targeted social support to cushion any impact on the poor. The mission recommended stepping up efforts to strengthen tax administration to mobilize additional revenues and help address priority spending pressures”.
The IMF, who acknowledged that the Nigerian economy has started to gradually recover from the negative effects of the COVID-19 global pandemic, observed that the sharp output contractions in the second and third quarters, GDP growth turned positive in Q4 2020 and growth reached 0.5 percent (y/y) in Q1 2021, supported by agriculture and services sectors.
The global financial body said with the recovery in oil prices and remittance flows, the strong pressures on the balance of payments have somewhat abated, although imports are rebounding faster than exports and foreign investor appetite remains subdued resulting in continued FX shortage