IMF Warns Nigeria over it’s plan to renew the use of fuel subsidies
The International Monetary Fund has warned the federal government over it’s plan to renew the use of fuel subsidy.
The IMF echoed this on Thursday while showing concern over Nigeria’s move to renew fuel subsidies and urged the government to continue efforts to unify its exchange rates.
Africa’s largest oil exporter, which still has to import almost all its fuel needs due to lack of refining capacity, said in March it had ended costly fuel subsidies.
The statement reads;
“The mission (IMF team) expressed its concern with the resurgence of fuel subsidies,” the IMF said in a statement following virtual meetings with the Nigerian authorities.
“The mission recommended maintaining the momentum toward fully unifying all exchange rate windows and establishing a market-clearing exchange rate,” it added.
The country’s central bank has recently been letting the currency’s official value gradually weaken in an apparent move to allow it to converge with what is known as the NAFEX rate, a market-determined rate for investors and exporters.
The IMF’s comments come after the World Bank this week said the central bank’s management of the foreign exchange regime had reduce access to foreign exchange, undermining investor confidence and investment appetite.
The IMF also said in its statement on Thursday that Nigeria’s banking industry remained well-capitalised with the level of non-performing loans (NPLs) contained.
“Nevertheless, it remains to be seen what share of forborne loans may turn non-performing as the impact of the pandemic abates,” it said, adding that NPLs often rose towards the end of an economic crisis.