IMF Expresses “concerns with the resurgence of fuel subsidies” in Nigeria

IMF Expresses “concerns with the resurgence of fuel subsidies” in Nigeria

A microchip is a composite of transistors which are biased at different regions using current. In analog circuits, you need to calculate the amount of current to pass through the transistors so that they will run within the operating regions of interest. To determine that current, you solve some calculus which provides you the length, width, etc of the transistors. But no matter what you have done, you will always optimize things when simulations show variations from design and operations. Those variations come from many factors, including the process you have designed for. This is what I do for a living!

Interestingly, the processes involved in many circuits are also what great nations use to run policies. You commit to a policy, you try things and over time, you look at data. Depending on what you have seen, you recalibrate. For example, President Biden is learning many things on the correlation between social support and looking for jobs.

That brings me to a new IMF call on Nigeria: the resurgence of fuel subsidies: “The mission expressed its concern with the resurgence of fuel subsidies. It reiterated the importance of introducing market-based fuel pricing mechanism and the need to deploy well-targeted social support to cushion any impact on the poor.” 

“The mission expressed its concern with the resurgence of fuel subsidies. It reiterated the importance of introducing market-based fuel pricing mechanism 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 Nigerian economy has started to gradually recover from the negative effects of the COVID-19 global pandemic. Following 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.

“Nevertheless, the employment level continues to fall dramatically and, together with other socio-economic indicators, is far below pre-pandemic levels. Inflation slightly decelerated in May but remained elevated at 17.9 percent, owing to high food price inflation.

“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.”

It added that the IMF mission appreciated the authorities and other counterparts for the open and thoughtful discussions and excellent cooperation.

My question is this: Why are we going back to this? What is the justification after we swore that it was all over?

My understanding was that Nigeria was phasing this out. Now that it is coming back – why, and what have we learnt for it to be back. I understand that the government does not want the burden of fuel cost on the poor. But that is why we need to get the National Identity Management Commission working so that we can deliver support to the needy in a more targeted ways via the National Identity Numbers.

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