The Managing Director, International Monetary Fund (IMF), Mrs.
Christine Lagarde, has advised the Nigerian government to jettison
spending on fuel subsidy and instead expend such money on health,
education and infrastructural development.
Lagarde, who made the call Thursday during the Global Policy
Agenda press briefing at the ongoing World Bank Spring Meeting in
Washington DC, said subsidy spending was infringing on other
critical areas of capital development, including health, education
and infrastructure, hence the need for the government to
refocus.
The IMF chief said it is the monetary institution’s general
principle to discourage fossil fuel subsidies because of its
consequences on other areas of life and development.
She said: “As far as Nigeria is concerned, with the low revenue
mobilisation that exists in the country; in terms of tax to GDP,
Nigeria is amongst the lowest. A real effort has to be done in
order to maintain a good public finance situation for the country.
And in order to direct investment towards health, education, and
infrastructural development.”
Highlighting some of the negative impacts of fuel subsidy,
Lagarde said: “If you look at our numbers from 2015, it is no less
than about 5.2 trillion dollars that are spent on fuel subsidies
and the consequences thereof. And the Fiscal Affairs Department has
actually identified how much would have been saved fiscally but
also in terms of human life, if there had been the right price on
carbon emission as of 2015. Numbers are quite staggering.
“If that was to happen, then there would be more public spending
available to build hospitals, to build roads, to build schools, and
to support education and health for the people.
“Now, how this is done is the more complicated path because
there has to be a social protection safety net that is in place so
that the most exposed in the population do not take the brunt of
those removal of subsidies principle. So that is our position.”
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