Economic experts have blamed the recent increase in prices from petrol, Value Added Tax (VAT) to electricity tariff on the International Monetary Fund (IMF) and the World Bank.

The experts said the two global financial institutions are known for dictating economic direction whenever a nation approaches them for financial assistance during a tough economic period.

Prof. Akpan Ekpo, an economist and Chairman of the Foundation for Economic Research and Training, said, “Once a country does not run its economy well and it wants to borrow from the IMF, it will be given conditions. If the economy is well-run, the country may be given soft conditions.

“But if the economy is not well-run, the country will be given tough conditions. At times, the reforms the World Bank or IMF wants the country to implement may not augur well with the common man. Some reforms are in our interest.”

In recent years, the IMF and the World Bank had expressed concerns about Nigeria’s weak revenue generation when compared to other nations, including African nations.

The IMF, in April, said Nigeria must up revenue collection efficiency to simultaneously finance its high rising debt profile and embark on capital projects necessary to further and sustain economic productivity.

This was before the Federal Government approached the Fund for $3.4 billion emergence assistance to address severe economic damage caused by the COVID-19 pandemic.

The Federal Government secured the loan after agreeing to remove fuel subsidy, introduce a single forex rate and up VAT and other taxes.

In a letter dated April 21, 2020, the Federal Government agreed to the demand and responded that “the recent introduction and implementation of an automatic fuel price formula will ensure fuel subsidies, which we have eliminated, do not reemerge.”

It immediately adjusted the nation’s foreign exchange rate in line with the Fund’s demand to N379/US dollar.

Dr. Bongo Adi, an economist and Senior Lecturer, Lagos Business School, said, “We know what the Bretton Woods institutions stand for. They are pro-market, liberal economic institutions. Before you access their loans, you have to be ready to meet certain conditions.

“Surely, you can see that there is a linkage between the loans we are trying to get and the conditionalities they have always traditionally required of any country seeking loans.”

However, apart from the IMF and the World Bank, some Nigerians including Investors King Ltd had been advocating for fuel subsidy removal and the deregulation of the downstream oil sector.

Deregulation will boost investment in the sector and finally put to an end fuel scarcity that over the years have crippled economic activities and overall growth of the nation. It also means that over N1 trillion budgeted for subsidy in 2019 and preceding years can now be channeled into capital projects.

The Managing Director/Chief Executive Officer, Cowry Asset Management Limited, Mr Johnson Chukwu, explained it better.

He said, “With or without external pressures, there was an absolute need for Nigeria to remove subsidies on consumption and channel the resources to more critical sectors of the economy that will stimulate the economy.

“What the IMF and the World Bank were emphasising was that Nigeria had some inefficiencies in resource allocation and that if the country wanted them to give it support, the inefficiencies should be eliminated.

“They were urging the government to plug the wastages in the system.”