- World Bank calls for the removal of subsidies
- Says subsidy removal vital for economic growth
The World Bank has asked the Nigerian government to end petroleum subsidies in the next three to six months. The bank advised Nigeria on implementing an aggressive reform effort to improve the economic outlook in the country.
The Federal Government (FG), this year, enacted the Petroleum Industry Act (PIA), paving the way for the complete deregulation of the petroleum sector. Nigeria spent at least $2.1 billion in the first nine months of 2021.
The World Bank in a report says the urgent priorities for Nigeria in the next six months include ”… reducing inflation, improving exchange-rate management … eliminating the PMS subsidy … and improving infrastructure,”
Despite the call by the World Bank and the International Monetary Fund (IMF), the removal of subsidies will have huge and drastic consequences on the lives of millions of poor in the country. However, the Nigeria Labour Congress (NLC) warned that, it would resist any attempt at subsidy removal, leaving the government in a delicate situation.
”The complete removal of regressive fuel and electricity subsidies is a near-term priority, combined with adequate compensatory measures for the poor,” the IMF said earlier this week.
The Minister of Finance, Zainab Ahmed confirmed the need for the removal of fuel and electricity subsidies calling the the subsidies ”retrogressive”.
”Efforts at addressing revenue leakages include concluding the service-wide implementation of IPPIS; dimensioning cost of tax waivers and promoting policy dialogue and transparency around tax waiver regimes; elimination of regressive subsidies on petrol price and electricity tariffs; a cost-to-income-ratio cap for Government Owned Enterprises (GOEs) with a view to improving remittances to the Federal Government’s coffers,” Zainab Ahmed stated.