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The International Monetary Fund (IMF) forecasts that if the current fuel pump price cap and energy subsidies are maintained in 2024, Nigeria will spend almost N7 trillion.
Naija News reports that the organization detailed that low growth, decreased revenue collection, rising inflation, and long-standing external imbalances were among the difficult economic conditions the current administration inherited. It emphasized that if fuel pump prices and electricity tariffs are kept below their recovery costs, Nigeria may have to pay up to 3% of its GDP in taxes by 2024. “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,” IMF said in a statement following a recent visit by an IMF team led by the IMF Mission Chief for Nigeria Axel Schimmelpfennig. The National Bureau of Statistics’ most recent GDP report has data indicating that the GDP current market price for 2023 is N234.4trn, with N7.032trn representing 3% of that amount. The latest information was revealed a few weeks after the international lender alleged that the federal government capped fuel prices at retail stations in its Executive Board’s Post Financing Assessment. The IMF said the Tinubu administration has “capped retail fuel and electricity prices” ostensibly to “ease the impact of rapidly rising inflation on living conditions, thus partially reversing the fuel subsidy removal.” Recall that President Bola Tinubu declared the elimination of fuel subsidies during his inauguration speech on May 29, 2023, which led to an increase in the cost of products and services throughout the nation. Following the elimination of the fuel subsidy in May 2023, the price at the pump at NNPC fueling stations went from N185 to N400 to N568 per liter, with some currently selling for more than N600. Currently, depending on the location countrywide, it sells for between N650 and N700.
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