…Says oil producers spent $5.2tr on that in 4 years
The International Monetary Fund (IMF), Thursday, gave reasons why the Federal Government should do away with all forms of petroleum subsidy currently enjoyed by the citizens despite growing anxiety against any such intervention by President Muhammadu Buhari administration.
President Buhari had raised fuel price from about N87 in 2016 to the present N145 per litre amid hue and cry by the country’s highly impoverished populace.
But in her opening press briefing at the ongoing spring meetings of the World Bank and the International Monetary Fund, (IMF) in Washington DC, Christine Lagarde, the managing director of the Fund, explained that removing all forms of subsidies was the only option left for Nigeria to raise more money to fund its dilapidated infrastructure and improve the living standards of the people given its poor tax to GDP status compared to other countries in its income bracket . She disclosed that a whopping $5.2trillion has so far been spent by oil producing nations across the world on fuel subsidy in the last four years.
The IMF boss said that for obvious reason, and as a general principle , the Fund believes that removing fuel subsidy was the right way to go.
“ For various reasons, we believe that removing fossil fuel subsidies is the right way to go. If you look at our numbers from 2015, it is no less than about $5.2 trillion dollars that are spent on fuel subsidies,” she said
According to her, the Fiscal Affairs Department has actually identified, how much would have been saved fiscally from transactions, but also in terms of human life if there had been the right price on carbon emission as of 2015, the numbers are quite staggering.
Lagarde said that if such huge sum spent on subsidy had been saved, 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 the position we take”. She said
She added that as far as Nigeria was concerned and given the low revenue mobilisation capacity in the country in terms of tax to GDP, it remains among the lowest with less than 10 per cent tax income to GDP size.
Lagarde, however, advised that real efforts should be made by the government to maintain a good public finance situation for the economy to direct more investment towards health, education, and infrastructure.
Meanwhile, newly appointed President of the World Bank Group , David Malpass, has lamented Africa’s poverty level has complicated the bank’s dream of reducing extreme poverty by 2030.