WTF!! Nigeria must hike fuel price – IMF insists

The International Monetary Fund (IMF) has, once again, advised the Federal Government to increase the pump price of petrol by reducing further, oil subsidy offered by the government. This is one of the recommendations by the multilateral institutions in this year’s ‘Article IV Consultation with the Government of Nigeria’.
The IMF made the article IV recommendations available in a statement yesterday from its Washington DC Head Quarters.
Fuel subsidy removal is a vexing issue in Nigeria, which has led to labour unrest and the loss of billions of Naira in manpower terms, the most recent case being the workers strike in January 2012.
The IMF had an identical recommendation to....
government in previous Article IV Consultations with the government.
Fuel subsidy removal, The IMF says, is one of the several fiscal options government should pursue for the Nigerian economy to sustain its momentum.
This option, the IMF says, when implemented in concert with other of its counsel, will inexorably ‘ensure macroeconomic stability’.
Other measures recommended by the Bretton Wood institution include the passing of the Petroleum Industry Bill to improve transparency in the oil sector and a transition from the excess crude account arrangement to the Sovereign Wealth Fund.
“These measures should be supported by full implementation of the Treasury Single Account and the integrated information management systems. Maintaining fiscal discipline in the run up to the elections is also important.”
The IMF tells government to improve non oil revenue by broadening the tax base and ensuring there are no sacred cows in the tax system.
“Efforts should be geared towards boosting non oil revenue by broadening the tax base, improving tax administration and curtailing exemptions”, it counselled.
Still on the oil industry, the IMF Directors underscored that adopting a rule based reference oil price in fiscal projections and further strengthening public financial management should help the authorities achieve their consolidation objectives.”
Directors called for strong action to address oil theft and production losses. They advised the authorities to strengthen the regulatory framework by passing a sound Petroleum Industry Bill with enhanced oversight and transparency provisions. The framework for anti money laundering and combating the financing of terrorism could support these efforts.
Earlier, the IMF had commended government for prudent management of the economy and made some prognosis on the economy.
According to the multilateral body, economic growth is expected to improve further in 2014, driven by agriculture, trade, and services. Inflation should continue to decline, with lower food prices from higher rice and wheat production and supported by a tight monetary policy and a budget execution that maintains medium-term consolidation objectives.
It expects the country’s current account position to improve.
There are however, some Key risks to the growth of the economy, the world body observed. These include uncertainty about the pace of global recovery; unwinding of Unusual Monetary Policy (UMP); persistently lower oil prices and persistent oil production losses.
Other risks mentioned by the IMF are continuation of insurgency in the North; and slow implementation of reforms.
It advices sound and balanced economic policies over the medium term describing it as ‘critical’. “Policies should focus on rebuilding external and fiscal buffers, avoiding spending pressures from the political cycle, strengthening the transparency and governance of the oil sector, and enhancing financial stability, while promoting the availability of and access to finance. Over the medium term, it will be vital to ensure the steady implementation of the wide-range of structural reforms necessary to improve competitiveness and productivity, boost growth and job creation, strengthen governance, and build social cohesion”, the IMF said.

-Mydailynewswatchng

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