Nigeria at a Crossroads: Unpacking the IMF’s Warnings on Subsidy Removal and Currency Devaluation

From the military era to date, the Bretton Woods institutions, the International Monetary Fund (IMF), and the World Bank had reasons to warn Nigeria seriously about retaining subsidy regimes and the low parity of the Naira against the US dollar.

In February 2024, the IMF again reminded Nigeria to phase out fuel and electricity subsidies completely. In 2023, the Federal Government of Nigeria started the implementation of subsidy removal and the devaluation of the Naira.

In the same month, the same IMF cautioned Nigeria over mounting inflation, currency devaluation, sluggish economic expansion, and closures of businesses.

Didn’t the IMF know that the short-term challenges without a home-based production of petroleum products, an underperforming energy sector, heightened insecurity, and a consumption-dependent economy would, in the short-term, result in galloping inflation, closure of factories, deepening poverty, weakening local currency, etc.?

I am just at a loss on the contrasting positions of IMF and World Bank on Nigeria. The economists reading this post could help me out. I am willing to learn.

Grace and Peace!!!