*President Bola Ahmed Tinubu Should Be Weary Of The Bretton Woods Institutions*

Nigeria’s experiences with the Bretton Woods Institutions have been that of a roller coaster. Indeed, the relationship has been more of a turbulent one for Nigeria since the 1980s when an institution of the Bretton Woods, that is, the International Monetary Fund (IMF), became a household name after former president Ibrahim Badamasi Babangida implemented the infamous Structural Adjustment Programme(SAP) in 1986 as recommended by the IMF.

The Structural Adjustment Programme (SAP) that was aimed at remedying the country’s economic woes in the mid 1980s was a complete fiasco. It became an absolute disaster because it completely drained the disposable income of the average Nigerian, thereby driving most citizens into abject poverty and unimaginable hardships.

Just like the 1980s, the Brettons Wood Institutions, this time through the World Bank has advised the President Tinubu led government to increase the pump price of Premium Motor Spirit popularly called petrol to N750/litres. According to the Word Bank’s lead economist for Nigeria, Alex Sienaert, ”it does seem like petrol prices are not fully adjusting to market conditions. So, that hints at the partial return of the subsidy if we estimate what is the cost reflective of the retail PMS price of the would-be and assume that importation is done at the official FX rate. We think the price of petrol should be around N750/litre more than the N650/litre currently paid by Nigerians”.

Before I peruse the implications of Alex Sienaert’s comments, I would like to highlight the major mandates of the IMF and the World Bank. The IMF as stated in its articles of agreement, is to promote international monetary cooperation by providing short and medium term loans to help countries that are experiencing adverse balance of payments problems and challenges meet international payment obligations while the Word Bank promotes long-term economic development by lending money to poor member countries to improve their economies and standard of living, thereby reducing poverty. So while the IMF supervises the stability of the global monetary system, the core mandate of the World Bank is to reduce global poverty by assisting middle and low- income countries get out of poverty.

Instructively, the question now is has the World Bank helped to reduce poverty in Nigeria by encouraging the removal of fuel subsidy? Has the standard of living of the average Nigerian improved since the removal of fuel subsidy? Certainly not. Infact, it has receded from bad to worse to say the least.

French politician and lawyer, Christine Madeleine Odette Lagard, the erstwhile Managing Director of the International Monetary fund throughout her stay in office kept on insisting that the removal of fuel subsidy is the right way to go in Nigeria. While in office for eight years, she did not see the follies of refining Nigeria’s crude outside the shores of Nigeria especially against the backdrop that Nigeria is about the only country in the comity of OPEC that does not have a functional refinery, let alone refining its crude.

The economic woes that followed during the implementation of SAP by IBB in1986 are conspicuously prevalent today. The only thing remaining is the complete manifestation of the attendant parlous consequences of fuel subsidy removal and funny enough, that is what the World Bank is inadvertently or advertently pushing for.

The removal of fuel subsidy by President Bola Ahmed Tinubu since the last six months has caused untold hardship to Nigerians. The disposable incomes of the citizenry have steadily petered, inflation rate has reached an all time high of 28.20, the highest in the last 20 years, cost of living has suddenly become very high and poverty and hunger stare helpless Nigerians in the face.

When President William Ruto of Kenya assumed office in September, he scrapped subsidies on fuel and maize flour in an attempt to encourage production in Kenya. The cut in subsidies led to a disproportionate high living cost, skyrocketing pump prices, high inflation among others. But thank God that he realized his mistakes on time and promptly made a U-turn by reinstating subsidies temporarily all in an attempt to make life bearable for the citizenry of Kenya.

Recently, Javier Gerardo Milei was sworn in as the president of Argentina. Suffice it to say that though Argentina is one of the largest economies in Latin America, Argentina has been enmeshed in several economic challenges since 2001 when it defaulted on its international sovereign debt three times. Just like Nigeria, Argentina is experiencing hyperinflation. Infact, in November, inflation was 160.9% with the trend pointing toward future increase. Argentina is heavily indebted and about 40% of the people live below the poverty line with many depending heavily on government assistance to get by. Coupled with this is the fact that international tensions have made Argentina’s economic recovery difficult as foreign nations continue to withhold their financial support in light of Argentina’s political and economic debacles.

However, immediately President Javier Gerardo Milei was sworn in, what did he do? He shrank the state’s workforce by around a third, cutting the number of ministries in half to nine and reducing secretariats to 54 from 106 because according to the president, ”there is no money”. As if these were not enough, he immediately sold two national private jets and slashed the number of official vehicles and drivers by half to reduce government spending and stave off Argentina’s 3, 678% annual hyperinflation. Experts have argued that these latter moves will save the country $3 billion annually.

According to Mr. Manuel Adorni, the presidential spokesman, ”one of the great objectives we have as a government is to put an end to privileges. We are trying to avoid and we are making an effort so that the catastrophe does not end up happening”.

President Bola Ahmed should learn from President William Ruto of Kenya and emulate the peoples oriented reforms of President Javier Gerardo Milei of Argentina as nobody knows it all. This is what I think the World Bank should encourage the President Bola Ahmed Tinubu’s led government to do rather than plunge Nigerians into further hardships by increasing pump price to 750/litre. Further, I would welcome the World Bank that will help the President Tinubu’s government keep to its promise of at least ensuring that the Port Harcourt Refinery is up and functioning as promised, come December 31, 2023. These, among others, will help reduce poverty in Nigeria.

Nigeria does need any further increment in pump prices at his critical time. If for any reason, the President of Nigeria must not allow the painful hardships of the SAP era to replay itself.

—–Othuke Evroh—-