Fuel Crises, FG: Examining IMF's Social Spending Increase Advice

Speaking frankly, it is difficult to finger exactly what makes most advice from the International Monetary Fund (IMF) high-sounding and, perhaps, unwieldy; but it is what it is!

According to the IMF, increasing well-targeted social spending will cushion the anticipated adverse effects of fuel subsidy removal.

Recently, the Executive Board of the International Monetary Fund (IMF) was observed to have recommended that the Nigerian government should increase well-targeted social spending to cushion the anticipated adverse effects of fuel subsidy removal.

The recommendation is contained in a statement detailing the conclusion of IMF’s just concluded 2022 Article IV Consultation with Nigeria.

According to the IMF, fuel subsidy payments have deprived Nigeria of increasing its oil revenues despite recent global oil price increases. Nigeria plans to finally remove fuel subsidies by June this year.

“Directors highlighted the need for bold fiscal reforms to create the needed policy space, put public debt on sound footing, and reduce vulnerabilities.

“They urged the authorities to deliver on their commitment to remove fuel subsidies by mid-2023, and to increase well-targeted social spending,” the IMF said.

It also says the government should stay committed to removing the fuel subsidy by the highlighted timeline if the country will increase its oil revenues. 

The IMF added that there should be an improvement in transparency and accountability in the oil sector to enhance growth.

Conclusion

The question at this point is, 'To what extent can this advice from the IMF be taken as sustainable?'

Or are pieces of advice simply dished out for the sake of it? Is there really anything like social spending in Nigeria, to start with?

While this opinion is not meant as an attack on the IMF, it is, however, seeking confirmation that in all of IMF's posturings regarding national economies such as Nigeria's, enough due diligence is directed at unearthing the real issues behind trailing economies other than resort to hypothetical models.

This view is anchored on the fact that any voyage through national fiscal archives will reveal so much of IMF's forecasts that hardly translate into advancing the subjects of the forecasts.

IMF is such a prestigious global body that ought to understand how much weight, positive or negative, statements from them carry.