Getting rid off fuel subsidy and consolidation of Nigeria’s fiscal policy-IMF’s key recommendations for Nigeria   

09 Feb 2022: Post their latest article IV consultation with Nigeria, the executive directors of The International Monetary Fund (IMF) have some recommendations for the nation.

The IMF directors applaud the Nigerian Government's "proactive management of the COVID-19 pandemic and its economic impacts".

They, however, noted that holding on to the positive outlook would not be easy as it depends entirely on the impact of certain risk factors, including the pandemic's trajectory, oil price fluctuations and security challenges in the country.

In the meantime, the IMF directors strongly recommend Nigeria to consolidate their fiscal policies which they said would help "to create policy space and reduce debt sustainability risks".

Secondly, they brushed on the requirement for an increased domestic revenue mobilisation push which could be done by way of further increasing the country's value-added tax, ensuring tax compliance and making tax incentives rational.

They urged the Nigerian Government to do away with fuel subsidies, while also having some compensatory measures in order to reduce the damage the removal could have on the poor masses.

Further recommendations include further unification of Nigeria's exchange rate market, containing inflation, and maintaining a supportive monetary policy in the near term.

It should be noted that during an Article IV Consultation with a country, IMF's economic team visits the country and assesses its economic and financial developments. The team also engage with the country's officials on issues such as the government's financial policies.

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