IMF confirms return of petrol subsidy under Tinubu

The International Monetary Fund (IMF) has announced that the Nigerian government has reinstated subsidies on premium motor spirit (PMS), commonly known as petrol.

On May 29, 2023, during his inauguration speech, President Bola Tinubu declared an end to petrol subsidies. Shortly after, the Central Bank of Nigeria (CBN) consolidated various exchange rate regimes into one, resulting in a weakening Naira-to-Dollar value.

Over the weekend, the IMF released a statement following its Executive Board’s Post Financing Assessment with Nigeria. It expressed concern that the government had imposed price caps on fuel at retail stations.

The IMF advised Mr. Tinubu's administration to completely cease petrol subsidy payments to allocate funds for government operations.

Following the removal of petrol subsidies in May 2023, pump prices shifted from N185 per litre to N40 per litre and then soared to N568 per litre at NNPC fuelling stations, with others charging above N600.

Despite fluctuations in global crude oil prices, the government asserted that pump prices would vary post-subsidy removal. However, prices have remained consistent.

In its recent statement, the IMF highlighted that the government has capped retail fuel and electricity prices ostensibly to mitigate the impact of rising inflation on living standards, thereby partially reversing the subsidy removal.

Nevertheless, the IMF emphasized that fuel and electricity subsidies are expensive, fail to reach those most in need of government assistance, and should be phased out entirely.

The IMF commended the government's emphasis on revenue mobilization and digitalization, noting that these measures would enhance public service delivery, safeguard fiscal sustainability, and eliminate the necessity for CBN financing through means that have exceeded N20 trillion.