The International Monetary Fund (IMF) has advised the Nigerian government to prioritize the full implementation of its cash transfer program to aid vulnerable households.
The recommendation is contained in a statement by the Fund following a recent visit by an IMF team led by Axel Schimmelpfennig, the IMF mission chief for Nigeria.
The IMF added that the established social safety net program, designed to disburse cash transfers to the poor and vulnerable, needs to be operational to its fullest capacity.
According to the international organization, this step is crucial before the government takes on the task of reevaluating fuel and electricity subsidies.
The statement read: “Recent improvements in revenue collection and oil production are encouraging. Nigeria’s low revenue mobilization constrains the government’s ability to respond to shocks and to promote long-term development.
“Non-oil revenue collection improved by 0.8% of GDP in 2023, helped by naira depreciation. Oil production reached 1.65 million barrels per day in January as the result of enhanced security. The capping of fuel pump prices and electricity tariffs below cost recovery could have a fiscal cost of up to 3 percent of GDP in 2024.
It also said this approach ensures that the economically vulnerable segments of the population remain shielded, as the government contemplates adjustments to the existing fuel and electricity subsidy framework.
According to the statement, the continuation of capping fuel pump prices and electricity tariffs below their recovery costs could lead Nigeria to incur fiscal costs of up to 3 percent of its Gross Domestic Product (GDP) in 2024.
