Nigeria Needs FX Unification, Subsidy Removal for Economic Stability—IMF
By Adedapo Adesanya
The International Monetary Fund (IMF) has reaffirmed its support for the removal of fuel subsidy and the exchange rate unification of the administration of President Bola Tinubu, insisting that the policies are good for Nigeria’s economy.
A representative of the global lender, Mr Ari Aisen, while featuring on Channels TV on Tuesday, maintained that the two policies must remain for Nigeria to reach macroeconomic stability.
“After the position that needs to be well managed to avoid potential reversal, policies of subsidizing fuel, and controlling exchange rate will lead to a much better outlook for the Nigerian economy,” he said.
He mentioned that if inflation decreases, exchange rates become more predictable, leading to potential investment flowing into Nigeria, like an open door of opportunities, adding that untapped potential has persisted and must be unleashed.
Furthermore, Mr Aisen said the gross domestic product (GDP) growth has been soft and it was expected because of the higher prices of fuel, inflation which has been high and biting the income of Nigerians, which has an impact on consumption but that the nation was in a transition period and the initial move of the reforms was in the right direction.
Speaking on Nigeria’s debt to gross domestic product ratio, the IMF staff said the government needs to work on its fiscal policies.
“Debt to GDP has been on a moderate level in Nigeria and it is very important that policies are put in place containing the fiscal policy, to reduce financial needs of the government,” he said.
Mr Aisen said all the conversation about social transfers to the poorest needs to continue.
“Our colleagues at the World Bank have been having very important discussions with the authorities on this and hopefully the government can launch these important social transfers.
“There is no simple solution to these problems, we always knew that there would be some transition that would incur some pain to all involved.
“It is very important that the burden does not fall on the most vulnerable this time, and that both government and private sector come together to provide a solution that actually saves the pain from the most vulnerable in society.”