The World Bank has thrown its weight in support of the Federal Government’s subsidy removal and the exchange rate unification.
This comes weeks after President Bola Tinubu’s inaugural speech on subsidy removal and the need to unify Nigeria’s exchange rate.
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Speaking at an event organised by the World Bank to assess the nation’s economy in the last six months on Tuesday, Country Director, Dr Subham Chadhuri, explained that the policy though painful remains key to rebuilding the economy of the nation.
Mr Chadhuri, however, advocated measures that will reduce the impact on the people going forward.
He further stated that the World Bank’s concessionary funding to Nigeria currently stands at over ten billion dollars.
Also speaking, a lead economist at the World Bank, Alex Seinart, said the removal of the fuel subsidy is projected to achieve estimated fiscal gains of about 3.9 trillion Naira in 2023.
The gains according to him are expected to reach over 21 trillion naira between 2023 to 2025.
The economist further projects that the petroleum subsidy removal is likely to lead to an increase in inflation in the upcoming months before contributing to disinflation in the medium term.
On the exchange rate, the senior economist at the world bank said that the previous foreign exchange management approach impeded investment and growth, contributed to inflation and undermined the efficacy of the monetary and fiscal policies.
Latest projection means the number of poor Nigerians will rise to 100.9 million if the government fails to compensate vulnerable citizens for fuel subsidy removal.
The World Bank Nigeria Development Update report noted that Nigeria’s inflation has risen to a 17-year high, and has been driven by a number of factors, such as CBN funding of budget deficit, previous multiple exchange rates, devaluation, and trade restrictions.
The report read, in part, “Consumer price inflation has surged and is currently one of the highest globally, which is related to Nigeria’s fiscal imbalance and points to the urgency of reform efforts. Inflation in Nigeria has been high for many years due to structural factors, but it escalated in 2022, to the point where consumer prices increased at their fastest pace for 17 years.”
