Nigeria could save up to 3.9 trillion naira (US$5.10 billion) this year alone after reforms to its foreign exchange market and the removal of a petrol subsidy, the World Bank said, but warned of growing inflationary pressures in the short term.
Nigerian President Bola Tinubu is embarking on the country’s biggest reforms in decades, including scrapping the popular but expensive petrol subsidy and unifying the country’s multiple exchange rates.
World Bank lead economist for Nigeria Alex Sienaert said during a presentation in the capital Abuja that savings from the reforms did not amount to a fiscal windfall.
“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,” Sienaert said.
Nigeria’s economy was expected to grow 3.3% this year and 3.7% next year, he said.
The World Bank and International Monetary Fund had for years called on Nigeria to remove the petrol subsidy, which cost US$10 billion last year, and free its exchange rate.
To deepen foreign exchange reforms, Siernaet said Nigeria should remove restrictions on a list of 43 items, including sugar and flour, that the central bank says cannot be funded from official dollar sales.
Tinubu’s monetary policy advisor Wale Edun said the naira, which has weakened to record lows after forex restrictions ended, was expected to stabilise just below 700 to the dollar.
Inflation, which hit 22.41% in May, would rise further following the reforms, Siernaet said, adding that some four million more Nigerians may have been driven into poverty in the first five months of this year due to high prices.
Labour unions are pressing Tinubu’s government to raise the monthly minimum wage more than sixfold to cushion workers against the impact of the fuel subsidy removal.
Nigeria has the second-largest population of poor people in the world and is one of the least developed countries globally, the World Bank said.
Asaase Radio 99.5 broadcasts on radio via 99.5 in Accra, 98.5 in Kumasi, 99.7 in Tamale, 100.3 in Cape Coast and on our affiliates Bawku FM 101.5 in Bawku, Beats FM 99.9 in Bimbilla, Somua FM 89.9 in Gushegu, Stone City 90.7 in Ho, Mining City 89.5 in Tarkwa and Wale FM 106.9 in Walewale
Tune in to broadcasts online: www.asaaseradio.com, Sound Garden and TuneIn
Follow us on Twitter: @asaaseradio995
Live streaming on facebook.com/asaase99.5. Also on YouTube: Asaase Radio Official.
Join the conversation. Call: 020 000 9951 or 059 415 7777. Or WhatsApp: 020 000 0995.
#AsaaseRadio
#AmplifyingTheVoiceofOurLand
#SafeMotorway4All
