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Removal of fuel subsidy in 2023 could save Nigeria N3.9 trillion -World Bank
The World Bank’s head economist for Nigeria, Alex Sienaert, revealed this at a presentation on Tuesday in Abuja at an event hosted by the bank…
Following the elimination of gasoline subsidies and changes to its foreign exchange market, Nigeria is expected to save up to $5.1 billion (N3.9 trillion) in 2023 alone, according to the World Bank.
The Bretton Woods institution acknowledged the anticipated economic benefits of the two programs, but it also issued a short-term inflation warning.
The World Bank’s head economist for Nigeria, Alex Sienaert, revealed this at a presentation on Tuesday in Abuja at an event hosted by the bank to evaluate the nation’s economy during the previous six months, saying that the savings from the reforms did not translate into a fiscal windfall.
Sienaert also said that the gains from these policies are expected to reach over N21 trillion between 2023 and 2025.
What the World Bank Lead Economist is saying
Sienaert had further projected 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.
- He said, “They stop Nigeria from going over what you might call the fiscal cliff. They really set the stage for a new and an upward trajectory in terms of Nigeria’s development path.’’
The senior economist for the World Bank stated that the old method of managing foreign exchange hampered investment and economic growth fueled inflation, and reduced the effectiveness of monetary and fiscal measures.
In order to further foreign exchange reforms, he said Nigeria should lift restrictions placed on a list of 43 products, including sugar and flour, that the apex bank has ordered cannot be given dollars at the official rate.
Reforms are painful but key to rebuilding economy
Also, speaking at the occasion, the World Bank Country Director for Nigeria, Dr Subham Chadhuri, said the international financial institution is in support of the Federal Government’s removal of fuel subsidies and exchange rate unification.
Chaudhuri explained that the policy though painful remains key to rebuilding the economy of the nation.
He further stated that the World Bank’s concessionary funding to Nigeria currently stands at over $10 billion.
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