IMF asks Tinubu to remove electricity subsidy to create space for Nigeria’s development spending

The International Monetary Fund has advised the Tinubu administration to scrap electricity subsidy to free up funds for “development spending” to strengthen Nigeria’s economy.

In a report which evaluated Tinubu’s performance since he assumed office last year, the Brethren Wood institution recommended the elimination of costly energy subsidy, suggesting that its continuous payment could push the nation’s economy further backwards and cancel any progress already recorded.

The IMF stressed that removing the energy subsidy will help Nigeria sustain its debt burden in that the nation will conveniently service all its debt obligations without accruing arrears that could harm its economy.

“They (IMF staff who met with Nigerian officials) underscored that mobilising revenue and reprioritising expenditure, including phasing out costly and regressive energy subsidies, are critical to creating fiscal space for development spending and strengthening social protection while maintaining debt sustainability,” the report stated.

The annual statement comprised conclusions from bilateral discussions between IMF board members and Nigerian authorities.

In the report, the IMF praised Tinubu’s audacious move to remove fuel subsidies, unify the nation’s exchange rate, and devalue the naira, which was projected to bring down the 38 per cent food price inflation to 29 per cent by year-end.