Follow Us on Google
By Adewale Sanyaolu
The International Monetary Fund (IMF) has said that 25 million (13 per cent ) of the population are food insure.
The food poverty statistics is contained in IMF’s Post Financing Assessment (PFA) released at the weekend.
“Latest estimates show 25 million (13 per cent of the population) are food insecure. The poverty rate was 37 per cent in 2022. Growth is projected at 2.9 per cent for 2023 and 3 per cent in 2024 as hydrocarbon performance revives, including from better control of theft,” the IMF stated, noting that “if the authorities succeed in developing and implementing a comprehensive reform agenda, the medium-term outlook would be much improved.”
This was as the IMF called on the Federal Government to phase out completely fuel and electricity subsidies because they do not reach those who need the government’s support.
According to the published Post Financing Assessment (PFA) report, the IMF added that the federal government had overwhelmed itself, thus recommending the total removal of both fuel and electricity subsidies be implemented.
Recall that the Federal Government had last year said that electricity subsidy between January and September 2023 gulped N375.8 billion, as power consumers paid a total of N782.6 billion in electricity bill during the same period.
The IMF, however, acknowledged that “temporary and targeted support to the most vulnerable in the form of social transfers is needed, given the ongoing cost-of-living crisis.”
The Fund stated that the government’s policy intentions are well placed to address the risks of a downside scenario where difficult trade-offs may arise between urgent humanitarian needs and debt service, including to the Fund, and in such circumstances, aggressive monetary tightening and fiscal adjustment combined with support from development partners would be needed to restore macroeconomic stability.
The IMF commended the federal government on the reforms it had implemented so far but reiterated that the fuel and electricity subsidies should be removed.
“The new administration has made a strong start, tackling deep-rooted structural issues in challenging circumstances.
“Immediately, it adopted two policy reforms that its predecessors had shied away from: fuel subsidy removal and the unification of the official exchange rates. Since then, the new CBN team has made price stability its core mandate and demonstrated this resolve by dropping its previous role in development finance.
“On the fiscal side, the authorities are developing an ambitious domestic revenue mobilization agenda. Like many other countries, Nigeria faces a difficult external environment and wide-ranging domestic challenges.
“External financing (market and official) is scarce, and global food prices have surged, reflecting the repercussions of conflict and geo-economic fragmentation.
“Per capita growth in Nigeria has stalled, poverty, and food insecurity are high, exacerbating the cost-of-living crisis.
“Low reserves and very limited fiscal space constrain the authorities’ option space. Against this backdrop, the authorities’ focus on restoring macroeconomic stability and creating conditions for sustained, high and inclusive growth is appropriate.
“The CBN has set out on a welcome path of monetary tightening. The Governor has committed to making price stability the core objective of monetary policy, and the CBN has taken actions to mop up excess liquidity.
“Continuing to raise the monetary policy rate until it is positive in real terms would be an important signal of the direction of monetary policy.
“The government’s focus on revenue mobilization and digitalization would improve public service delivery and safeguard fiscal sustainability. The envisaged reduction in the overall deficit in 2024 would help contain debt vulnerabilities and eliminate the need for CBN financing.
“Temporary and targeted support to the most vulnerable in the form of social transfers is needed, given the ongoing cost-of-living crisis. Fuel and electricity subsidies are costly, do not reach those that most need government support and should be phased out completely,” IMF said.
