The International Monetary Fund (IMF) for the second time this year has reiterated the need for Nigeria and other countries that still retain the policy of subsiding fuel consumption to put an end to the policy.
Fuel subsidy in Nigeria has been a subject of discussion among the stakeholders of the country’s economy. In a blog post titled, “Fuel for Thought: Ditch the Subsidies”, the IMF made known that the fuel subsidy which some countries pay as an attempt to reduce the price of fuel for consumers, typically benefits the rich more than the poor.
According to the IMF, halting the fuel subsidy could gain up to four per cent of global Gross Domestic Product (GDP).
According to him, ”Removing fossil fuel subsidies, which typically benefit the rich more than the poor, could gain up to four per cent of global GDP in additional resources over the medium term to invest in people, growth, and help protect the most vulnerable.
“We define the subsidies — which amount to 6.5 per cent of GDP globally — broadly. The IMF’s calculations include both the government funding to artificially reduce the price of energy below cost (0.4per cent of global GDP) and the under taxation of fuel consumption (6.1per cent of global GDP), because energy consumption contributes to global warming, local pollution, increased traffic congestion and more accidents.”