Emma Ujah, Washington DC

The International Monetary Fund (IMF) has said Implementation of social investments would help ease the pains of subsidy removal, and assist vulnerable Nigerians cope with reforms of the present administration.

Addressing the press, this afternoon, at the ongoing Annual Meetings of the IMF and World Bank, in Washington DC, the Director of African Region, Mr. Abebe Selassie also denied its involvement in the removal of fuel subsidy and said that the decision was purely domestic.

His words, “Nigeria is a place we don’t have programmes so the work we do is the regular dialogue and other countries- Japan or the UK.

“Of course, we put out our thoughts on the effective use of public resources and I think Nigeria needs a lot of investment in infrastructure, health and education as it continues to sustain subsidies in fuel and other areas.

“At the end of the day, these are deep domestic and political choices that the government has to make. They have made choices that we think are in the direction of making use of public resources that in the long run result in incredible economic growth.”

Mr. Abebe admitted that fuel subsidy had brought a lot of suffering to Nigerians and advised the federal to implement social investments that would assist the vulnerable cope with the pains of the reforms.

According to him, “We recognize that this entails a lot of costs, in terms of social investment costs. This can be done by rolling out social protection, particularly for the vulnerable”

“The immediate effect of doing these changes always causes quite a lot of dislocation. We do not doubt that the situation is extremely difficult. On top of the situation where food prices have been quite acute in our region and affect other essential goods.

“Some of the savings from the fuel subsidy removal should be channelled to social protection to help cushion the effects on the most vulnerable households. Those are our views as it continues to sustain the reforms.

“Against this background, we have discussed the tough policy actions that policymakers need to take to address the challenges that confront their various countries. They have to make room to spend on development and social protection and to do socially acceptable reforms.

The director said that over the years, his organization had learnt a lot of lessons from reforms carried out by member countries that it had worked with and that at the moment, it made sure that reforms advised by the IMF do not result in heightening inequalities or increase the difficulties of the vulnerable.

“For instance, we emphasise how important to avoid spending costs where investment is necessary especially why they have to continue to spend money on education, on health in order to sustain growth and improve social outcomes,” he said.

Mr. Abebe said that with Nigeria facing high inflation, it needed a lot of balancing art, especially in terms of funding needed to provide social investments for the poor and the investments needed in infrastructure to grow the economy.

His words, “This is a difficult trade-off that the government of Nigeria is faced with at the moment, adding that the economic situation in Nigeria pre-dating the removal of fuel subsidies was not sustainable.”

The Regional Outlook indicated that 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.

It added, “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. Within this environment, policymakers face a difficult balancing act in striving for macroeconomic stability while also working to address development needs and ensure that reforms are socially and politically acceptable.

“Protecting the most vulnerable from the costs of adjustment and realizing reforms that create sufficient jobs will be critical to mobilizing public support.”