Implement cash transfer to protect low-income households, IMF urges FG

The global Monetary Fund has highlighted the need for the Nigerian government to fully implement its cash transfer programme targeted at assisting susceptible households.
The fund expressed this in a document titled, “IMF Staff Completes 2024 Article IV Mission to Nigeria” published on its website on Monday.
IMF noted that this step is vital before tackling the costly fuel and electricity subsidies.
According to the IMF, the established social safety net programme devised to provide cash transfers to destitute and susceptible individuals must operate at its maximum capacity.

This approach ensures that monetarily susceptible segments of the population remain protected while the government considers modifications to the existing subsidy framework.
The proposal comes focused concerns raised by the IMF regarding the fiscal burdens resulting from the current practice of subsidising fuel and electricity.

The statement followed a recent visit by an IMF team led by the IMF Mission Chief for Nigeria, Axel Schimmelpfennig.

The report noted that persistence to cap fuel pump prices and electricity tariffs below their recuperation costs could result in Nigeria incurring fiscal expenses of up to three per cent of its Gross Domestic Product in 2024.
The statement reads, “Recent enhancements in revenue collection and oil production are empowering . Nigeria’s low revenue mobilisation constrains the government’s ability to respond to shocks and promote long-term development.
“Non-oil revenue collection advanced by 0.8 per cent of GDP in 2023, helped by naira depreciation. Oil production reached 1.65m barrels per day in January as a 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 per cent of GDP in 2024.
“The recently accredited targeted social safety net programme that will provide cash transfers to susceptible households needs to be fully implemented before the government can address costly, implicit fuel and electricity subsidies in a manner that will ensure low-income households are protected.”
During the 2024 Article IV Consultations, the IMF team engaged in discussions with key Nigerian officials in Lagos and Abuja from February 12 to February 23, 2024.