• Tuesday, May 21, 2024
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Fuel subsidy, exchange rate reforms to boost Nigerian economy – IMF

Ari Aisen, IMF representative in Nigeria has said fuel subsidy removal and exchange rate unification will lead to a better outlook for the Nigerian economy.

He said in an interview with Channels TV on Tuesday that the removal of fuel subsidies and unification of exchange rate has to continue for Nigeria to reach macroeconomic stability.

“After the position that needs to be well managed to avoid potential reversal, policies of subsidising fuel, and controlling exchange rate will lead to a much better outlook for the Nigerian economy,” Aisen said.

He stated that if inflation can get lower, the exchange rate gets predictable and investment can start coming into Nigeria which is a free shoot of possibilities. The potential has been there and will continue to be there and needs to be unlocked.

Aisen said 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, has impact on consumption but we are in a transition period and the initial move of the reforms was in the right direction.

While speaking on Nigeria’s debt during the interview, he said the issue of debt has been discussed broadly and the needs of the government should be contained so that debt stock avoids growing further away from a reasonable amount.

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“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.

Aisen said the removal of fuel subsidies was a very important step because fuel subsidies ate into the financial needs of the country.

He said growth has to be inclusive and there is a need for job creation while citing the importance of people being included in economic activities,

“Tightening policies are needed but we should be mindful in our view to support the most vulnerable in our society through these challenging times and so they can eventually transit despite the hardship into a better position,” he said.

Aisen said all the conversation about social transfers to the poorest need 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.

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“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,” Aisen said.