Fear of Political Resistance, Corruption Hampering Subsidy Removal In Nigeria – IMF

The International Monetary Fund says the fear of political resistance, wide corruption and pressure from interested groups is hampering the junking of the energy subvention in Nigeria.

The IMF said this in its‘Nigeria Named Issues Paper’ report, which was prepared by a staff platoon of the Fund as background attestation for its periodic discussion with Nigeria.

The report read in part, “This fuel subsidy has taken up considerable (explicit or implicit) budget costs, constituting inefficient use of resources that could have been spent more effectively on pro-poor interventions in the economy.

“From the past experiences, the fear of political resistance for large price increase—coupled with widespread corruption and pressure from interested groups—has made the government hesitant to reform this untargeted subsidy.”

In January this time, the Federal Government decided to retain the controversial energy subvention for another 18 months following pitfalls of demurrers by the Nigerian Labour Congress and other interest groups.

The IMF has also said that Nigeria will probably depend on overdrafts from the Central Bank of Nigeria to fund its proposed petrol subvention bill.

It also said that the energy subvention negatively affects the country’s financial position, adding the financial deficiency.

The Minister of Finance, Budget and National Planning, Ahmed Zainab, lately said that Federal Government was planning to tap€ 2bn ($2.2 bn) by this month or coming of the plutocrat it raised in a Eurobond trade last time and targets more original borrowing in 2022 to help fund subvention on Premium Motor Spirit, popularly called petrol.