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Social protection needed to soften impact of FX reforms – IMF

The International Monetary Fund has said that the effects of the various reforms by the federal government needs to be cushioned through social response programs.

The Fund’s resident representative for Nigeria, Christian Ebeke, made this known on Tuesday during a webinar by Renaissance Capital Africa, titled “The Nigerian Economy: When All Is Said and Done…”.

“Social response infrastructure is going to complement the reforms. The digital cash transfer of N25,000 to 15 million households, though small, will serve as a blueprint for bigger efforts,” Ebeke said.

Ebeke noted that while the social program was stopped on the back of some scandals that rocked the ministry of humanitarian affairs, the government must sustain the program.

Besides creating support systems to the vulnerable, the IMF representative identified food insecurity as one of the risks the government must quickly tackle to avert a social crisis.

“Food insecurity is a great risk that if not addressed can slow down reforms and trigger social unrest,” Ebeke said.

Inflation, a macroeconomic risk, was also identified as what the government needs to address to calm the country’s economy.

Nigeria’s headline inflation accelerated to 29.90 percent in January, and the cost of food items which Nigerians spend larger parts of their incomes on have tripled, with food inflation jumping to 35.41 percent in January.

Since President Bola Tinubu announced petrol subsidy removal during his inauguration on May 29, pump prices have more than tripled, while the value of the naira has plunged following the floating of the currency, becoming the world’s worst-performing currency so far this year.

Ebeke stressed that the government must adopt more robust policies, both fiscal and monetary, to cut excess spendings, adding that “reforms should be complemented with sufficient tightening of policy.”

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