IMF advocates social protection plan, backs FG’S economic reforms

* Wants subsidy savings spent on healthcare, education
* Says no new loan request from Nigeria
* FG Sets 23% GDP revenue target — Edun

The International Monetary Fund (IMF) is in full support of the Federal Government’s ongoing economic reforms but says a social protection scheme for the vulnerable will make the restructuring even better.

It is of the view that savings from petrol subsidy removal could be spent on healthcare and educational sectors for maximum impact on the people.

The Director, African Department at the IMF, Abebe Selassie, gave the advice on Friday during the regional economic outlook for Sub-Saharan Africa press briefing on the sidelines of the ongoing World Bank/IMF annual meetings in Washington DC., USA.

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The IMF director said this was not the time for spending compression, but rather spending more on these sectors with a view to sustaining growth and improving social outcomes.

Selassie said governments would do better carrying out reforms that ensure the mobilisation of resources for schemes with the greatest impact on the people.

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Minister of Finance and Coordinating Minister for the Economy, Wale Edun, during a parley with investors also on the sidelines of the World Bank/IMF annual meetings, threw more light on the economic reforms in Nigeria.

He said it was only on October 2, 2024, that petrol subsidy was effectively removed through market-pricing practices.

“It is now that we will assess the gains of the subsidy removal, which will be a huge dividend to the people,” Edun said.

When asked if the federal government has approached the IMF for funding since the reforms took effect, Selassie said there has been no such request from Nigeria.

He applauded the reforms- petrol subsidy removal and exchange rate unification, describing them as better choices.

Selassie said: “They have made choices that we think, are within the direction of better use of public resources in a way that will unlock the incredible potential that the economy has.

“The reforms will make the economy more dynamic to invest in and will facilitate growth. And we welcome those reforms, while also recognising, that it has entailed quite a lot of cost adjustment.

“A better job can be done by rolling out social protection, particularly to the most vulnerable.”

The IMF chief, however, said the reforms embarked upon by Nigeria were deeply domestic and political choices for the country’s leadership.

He said the Sub-Saharan African countries were implementing difficult and much needed reforms to restore macroeconomic stability, and while overall imbalances have started to narrow, the picture is varied.

“Policymakers face three main hurdles,” he said.

“First, regional growth, at a projected 3.6 per cent in 2024, is generally subdued and uneven, although it is expected to recover modestly next year to 4.2 per cent.

“Second, financing conditions continue to be tight.

“Third, the complex interplay of poverty, scarce opportunities, and weak governance, compounded by a higher cost of living and short-term hardships linked to macroeconomic adjustment are fueling social frustration.”

On IMF’s intensified engagement in the region, he said the involvement is at one of the highest levels in recent history, with numerous ongoing programs and financial arrangements.

His words: “Since 2020, the Fund has made available over $60 billion in financing for the region. However, declining official development assistance is challenging the effectiveness of our support.

“Much work remains to be done to reinvigorate reforms and tap into the region’s tremendous potential.”

Selassie added that within this environment, policymakers face a difficult balancing…