Remove fuel subsidy- Lagarde
Senate President, Dr. Abubakar Bukola Saraki yesterday urged the International Monetary Fund, IMF to support Nigeria’s economic policies and help to spread the message to the international community that the new government in the country is committed to fiscal discipline.
Saraki while receiving a delegation of the Fund led by the Managing Director, Ms.Christine Lagarde, said the new government also has a supportive legislature which is devoted to enacting legislations that will create a conducive atmosphere for business to thrive.
He said, at this critical period when the economy is affected by the oil prices, what Nigeria required from international institutions like the IMF is solid backing for its policies aimed at diversifying and modernising the economy, creating more jobs, rebuild the national infrastructure and attracting foreign direct investments.
He assured the IMF team that there is a bi-partisan commitment of all members of the federal legislature on the need to work closely with the Executive arm in addressing the challenges facing the economy.
“That is why the focus of our Legislative Agenda is to give priority to laws that will provide a more conducive business environment, reduce the cost of doing business, make dispute resolution very easy, end impunity and reduce corruption in the system,” the Senate President said.
He assured the visitors that part of the support the legislature aimed to give to the economic recovery effort of the present administration is to “make laws that will block identified legal loopholes that have resulted in revenue leakages; expand the tax base; improve oversight systems; expose corruption and provide better legal frameworks to entrench the rule of law and end impunity”.
The Senate President used the occasion to call on the Central Bank of Nigeria, CBN to ensure that, in reacting to recent developments in the economy, it does not devalue the Naira for the mere sake of devaluation.
Rather, he called on the apex bank to introduce a more flexible foreign exchange regime and reduce the present restrictions on the autonomous market which do not allow business men to bring in foreign exchange or utilise what they have in their accounts.
“The IMF should support our CBN to bring in low interest loans to SMEs. We need to encourage entrepreneurs and make most of our new graduates job creators rather than job seekers. This is an area where we need the financial support and technical assistance of the IMF”, he said.
Lagarde, in her reaction, said Nigeria can still achieve sustainable and inclusive economic growth despite dwindling oil revenue by ensuring fiscal discipline, eliminating corruption and investing in infrastructure like roads, power, healthcare and affordable housing
But specifically, the IMF boss urged the federal government to remove the fuel subsidy in order to equitably fast-track the economy
According to her:
“Efforts should be made to streamline the cost of government and improve efficiency of public service delivery across the federal and sub-national governments. Transfers and tax expenditures should also be addressed. For example, continuing the move already begun by the government in the 2016 budget to eliminate resources allocated to fuel subsidies would allow more targeted spending, including on innovative social programs for the most needy.
“Indeed, fuel subsidies are hard to defend. Not only do they harm the planet, but they rarely help the poor. IMF research shows that more than 40 per cent of fuel price subsidies in developing countries accrue to the richest 20 per cent of households, while only 7 per cent of the benefits go to the poorest 20 per cent.
“Moreover, the experience here in Nigeria of administering fuel subsidies suggests that it is time for a change—think of the regular accusations of corruption, and think of the many Nigerians who spend hours in queues trying to get gas so that they can go about their everyday business, “she said.