Business News
To curb inflation, Nigeria must stop fuel subsidy – World Bank
He pointed out that the primary factor putting pressure on crude oil revenue has been the fuel subsidy, which has increased from N4…
The World Bank has advised Nigeria to find a new growth path through a chosen set of changes, which includes doing rid of fuel subsidies, citing how it is harming net government revenues coupled with petroleum theft.
According to Nairametrics, this was revealed by Alex Sienaert, the World Bank’s new lead economist for Nigeria, at its Thursday Nigeria Development Update and Country Economic Memorandum in Abuja.
Sienaert emphasized once more the necessity for Nigeria to control inflation by reducing the federal government’s reliance on Central Bank of Nigeria (CBN) financing.
The top official of the World Bank stated that in order for Nigeria to find a new route for growth, a number of key reforms in the areas of macroeconomic and institutional enablers as well as investment accelerators are required.
Despite the rise in oil prices, Sienaert encouraged the Federal Government to end the subsidy on fuel, noting that oil revenue has continued to fall.
He pointed out that the primary factor putting pressure on crude oil revenue has been the fuel subsidy, which has increased from N4 trillion to more than N9 trillion.
READ MORE: FG to remove Fuel subsidy by June 2023 – Finance Minister
He said, “Despite the production pressures, production revenues have increased but PMS subsidies have increased, As a result, net revenues would be lower this year at N2.3 trillion than they were in 2020, it’s the main culprit.”
However, Sienaert said that this has been sufficient to offset what they have seen on the net oil revenue side. Sienaert noted that Nigeria has been taking steps to mitigate this by growing non-oil revenues, which has been vital to avert even harsher pressure.
He emphasized how the cost of debt has significantly increased as a result of this. The Brettonwood Institution promoted the adoption of a single, market-reflective exchange rate, hiking VAT and excise rates, improving tax administration, and lowering the federal government’s reliance on CBN financing in order to increase non-oil revenues and control inflation.
He stated that Federal Government may also increase competition by incorporating it into Policy, increasing enforcement, and simplifying procedures to minimize costs.
Nigerian investment enabling factors
The chief official of the World Bank has suggested a number of investment enablers for the nation, including; By reducing import and foreign exchange limitations, trade is made easier and local value added is increased. Strengthening the institutional framework for financial remediation will increase access to funding.
Increasing power production by spending money on infrastructure to cut down on commercial and technical losses
Facilitating transport connectivity by reducing interstate transport costs.