The Managing Director, International Monetary Fund (IMF),
Lagarde said this on Thursday during the Global Policy Agenda press briefing at the ongoing World Bank Spring Meeting in Washington DC.
She argued that subsidy spending was infringing on other critical areas of capital development, including health, education and infrastructure, hence the need for the government to refocus.
The IMF chief said it is the monetary institution’s general principle to discourage fossil fuel subsidies because of its consequences on other areas of life and development.
She said: “As far as Nigeria is concerned, with the low revenue mobilisation that exists in the country; in terms of tax to GDP, Nigeria is amongst the lowest. A real effort has to be done in order to maintain a good public finance situation for the country. And in order to direct investment towards health, education, and infrastructural development.”
Highlighting some of the negative impacts of fuel subsidy, Lagarde said: “If you look at our numbers from 2015, it is no less than about 5.2 trillion dollars that are spent on fuel subsidies and the consequences thereof. And the Fiscal Affairs Department has actually identified how much would have been saved fiscally but also in terms of human life, if there had been the right price on carbon emission as of 2015. Numbers are quite staggering.
“If that was to happen, then there would be more public spending available to build hospitals, to build roads, to build schools, and to support education and health for the people.
“Now, how this is done is the more complicated path because there has to be a social protection safety net that is in place so that the most exposed in the population do not take the brunt of those removal of subsidies principle. So that is our position.”