Business

Subsidies benefit the rich, says IMF, promises to allow Nigeria decide

Published

2 years ago

April 17, 2023

The International Monetary Fund (IMF) says it will not interfere in the Nigeria’s government handling of its fuel subsidy policies.

It however expressed disapproval of subsidy policies for certain commodities in Nigeria, Kenya and other countries in Sub-Saharan Africa, maintaining that it should be scrapped.

Director, African Department of the IMF, Abebe Selassie, gave the position at the just concluded World Bank and IMF Spring meetings in Washington DC, USA.

He spoke to journalists at the forum against the recent development in which the Federal Government secured a $800 million World Bank facility as a fuel subsidy removal palliative.

Selassie said, ‘‘The benefits of such subsidies tend to accrue to richer segments of the society, and in a world where we still have elevated levels of poverty and with levels of development challenges, I’m not sure that this is the best use of resources.

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‘‘But then we leave it up to the governments the choices of whether to sustain those subsidy policies or remove them.

“However, what we asked them to do, and what is important is that the cost of this fuel subsidy is rather than being left as off-balance sheet it should be included in the regular fiscal appropriation process, so that the trade-offs that the government is making is clear and transparent.

‘‘Now, how governments do this, the extent of the fuel subsidies, of course also varies with global international market prices.

‘‘You know that whether to subsidize or not and to what extent, obviously is a very deeply domestic and deeply political issue. If governments want to do that, that’s fine. But we think it’s sub-optimal, as I said, for reasons I explained earlier that the benefits of subsidies tend to accrue to richer households.

‘‘We know, of course, in Nigeria that fuel subsidies have eaten up tremendous, tremendous amount of resources, at the same time that the government doesn’t have resources to address the huge investment needs, from health to education, to infrastructure. But this is a choice for Nigerian government and Nigerian civil societies to make.

‘‘We’ve also heard the discussion that’s going on the debate that’s going on, on whether this is ideal. We try and inform that debate with statistics and with practices elsewhere, but I think that’s our role.

‘‘So, for a country like Nigeria also, you know, the future trajectory of its economy is going to depend on a whole host of variables, or reforms that the government pursues and how effectively it uses the resources and the oil price trajectory.’

Already, the FG has announced that petrol subsidy will be removed from May 29 this year as a major assignment by the incoming administration.

The labour has vowed to frustrate the move.

International Monetary Fund

Related Topics:Featured fuel subsidy IMF

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Railway

Lagos Rail Mass Transit part of FG free train ride – NRC

Published

19 hours ago

December 21, 2024

Trends Admin

Lagos Rail Mass Transit part of FG free train ride – NRC

The Nigerian Railway Corporation (NRC) has disclosed that the Lagos Rail Mass Transit (LRMT) trains are included in the Federal Government’s free train ride initiative for the Christmas and New Year celebrations.

The LRMT, which currently includes the Phase 1 Blue Line Rail and the Phase 1 of the Red Line Rail, operates under the Lagos Metropolitan Area Transport Authority (LAMATA).

This announcement was made by Ben Iloanusi, the Acting Managing Director of the NRC, during an interview on NTA News TV on Friday, following the launch of the initiative earlier that day.

While Iloanusi stated that Phase 1 of both the Blue Line and Red Line Rail projects are part of the program, LAMATA has yet to confirm this inclusion.

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Iloanusi outlined the other routes benefiting from the scheme, which include the Lagos-Ibadan Train Service, Kaduna-Abuja Train Service, Warri-Itakpe Train Service, Port Harcourt-Aba Train Service, and the Bola Ahmed Tinubu Mass Transit in Lagos. Notably, little was previously known about the Bola Ahmed Tinubu Mass Transit service until this disclosure.

“Let me mention the routes where this free train service is happening. We have the Lagos-Ibadan Train Service, we have the Kaduna-Abuja Train Service, we have the Warri-Itakpe Train Service, we have the Lagos Rail Mass Transit trains, we have the Port Harcourt-Aba Train Service, and we have what we call the Bola Ahmed Tinubu Mass Transit, which is also in Lagos,” he stated.

Iloanusi provided operational updates, stating that passengers nationwide can access free tickets online or, for those unable to do so, at train stations where they will be profiled and validated.

He noted that passengers using NRC-managed services (excluding the Lagos Rail Mass Transit) should reserve tickets via the official website, www.nrc.gov.ng, with a valid ID required. He also advised travelers to plan, arrive on time, and bring valid identification.

Lagos Rail Mass Transit part of FG free train ride – NRC

Business

NNPC denies claim of Port Harcourt refinery shutdown

Published

20 hours ago

December 21, 2024

Trends Admin

Port Harcourt refinery

NNPC denies claim of Port Harcourt refinery shutdown

The Nigerian National Petroleum Company Limited (NNPCL) has denied claims in media reports that the newly refurbished Port Harcourt refinery has shut down.

The national oil company denied the claim in a press release issued by its Chief Corporate Communications Officer, Olufemi Soneye, on Saturday.

Soneye said the claim was false and urged Nigerians to disregard it. He stressed that the Port-Harcourt Refinery is fully operational.

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The statement read, “The attention of the Nigerian National Petroleum Company Limited (NNPC Ltd.) has been drawn to reports in a section of the media alleging that the Old Port Harcourt Refinery which was re-streamed two months ago has been shut down.

“We wish to clarify that such reports are totally false as the refinery is fully operational as verified a few days ago by former Group Managing Directors of NNPC.”

He noted that preparation for the day’s loading operation is currently ongoing, and added that claims of the shutdown are “figments of the imagination of those who want to create artificial scarcity and rip-off Nigerians.”

NNPC denies claim of Port Harcourt refinery shutdown

Business

CBN permits BDCs to buy up to $25,000 FX weekly from NFEM

Published

2 days ago

December 20, 2024

Trends Admin

CBN Governor, Olayemi Cardoso

CBN permits BDCs to buy up to $25,000 FX weekly from NFEM

The Central Bank of Nigeria (CBN) has granted Bureau de Change (BDC) operators temporary permission to purchase up to $25,000 weekly in foreign exchange (FX) from the Nigerian Foreign Exchange Market (NFEM).

This move, detailed in a circular dated December 19, 2024, is designed to meet seasonal retail demand for FX during the holiday period.

The circular was signed by T.G. Allu, on behalf of the Acting Director of the Trade and Exchange Department.

The arrangement will be in effect from December 19, 2024, to January 30, 2025.

Under the directive, BDCs may purchase FX from a single Authorized Dealer of their choice, provided they fully fund their accounts before accessing the market.

Transactions to occur at the prevailing NFEM rate

The transactions will occur at the prevailing NFEM rate, and BDCs are required to adhere to a maximum 1% spread when pricing FX for retail end-users.

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All transactions conducted under this scheme must be reported to the CBN’s Trade and Exchange Department.

The circular read in part:

“In order to meet expected seasonal demand for foreign exchange, the CBN is allowing a temporary access for all existing BDCs to the NFEM for the purchase of FX from Authorised Dealers, subject to a weekly cap of USD 25,000.00 (Twenty-five thousand dollars only).

This window will be open between December 19, 2024 to January 30, 2025.

“BDC operators can purchase FX under this arrangement from only one Authorized Dealer of their choice and will be required to fully fund their account before accessing the market at the prevailing NFEM rate. All transactions with BDCs should be reported to the Trade and Exchange department, and a maximum spread of 1% is allowed on the pricing offered by BDCs to retail end-users.”

The CBN assured the general public that PTA (Personal Travel Allowance) and BTA (Business Travel Allowance) remain available through banks for legitimate travel and business needs.”

These transactions are to be conducted at “market-determined exchange rates” within the NFEM framework.

This initiative reflects the CBN’s strategy to stabilize the FX market and manage seasonal surges in demand.