President Muhammadu Buhari has been called out by the International Monetary Fund over the government’s continued payment of fuel subsidy it said it had removed.
In a virtual meeting with the representatives of the Federal Government, the IMF mission led by Jesmin Rahman, according to a press release, expressed its concerns about rising fuel subsidies to the Nigerian authorities during a virtual meeting.
The Fund also stressed 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 commended the Central Bank of Nigeria for merging taking the official exchange rate to the NAFEX window.
However, they recommended the unification of all exchange rate windows and establishing a market-clearing exchange rate.
On monetary policy, they advised the country to strengthen the monetary targeting regime and integrating the interbank and debt markets.
Rahman was quoted as saying, “The Nigerian economy has started to gradually recover from the negative effects of the COVID-19 pandemic.
“Gross Domestic Product growth turned positive in the fourth quarter of 2020, and growth reached 0.5 per cent year-on-year in Q1 2021, supported by agriculture and service sectors.
“Nevertheless, the employment level continues to fall dramatically and together with other socioeconomic indicators, is far below pre-pandemic levels. Inflation slowed down in May but remains elevated at 17.9 per cent, owing to high food prices.
“As oil prices and remittance flows recover, the balance of payments has slightly strengthened, although imports are rebounding faster than exports and foreign investment subdued resulting in forex shortage.”
The mission urged the government to keep reliance on CBN overdrafts for deficit financing within legal limits.
