The World Bank on Tuesday declared support for president Bola Tinubu over the removal of subsidy on petrol and exchange rate unification in Nigeria.
The World Bank Country Director, Dr Subham Chadhuri, at an event to assess the Nigeria’s economy in the last six months, acknowledged that the subsidy removal and exchange rate unification policies are painful on citizens, noting that they are, however, key to rebuilding the economy of the country.
Chadhuri, therefore, emphasised that need for measures that will alleviate the hardship of the policies on the people.
The Country Director disclosed that the World Bank’s concessionary funding to Nigeria currently stands at over $10 billion.
A lead economist at the World Bank, Alex Seinart, added that the removal of subsidy on petrol is projected to achieve estimated fiscal gains of about N3.9 trillion in 2023. This revelation, however, underscores government’s claim of spending over N5 trillion in the budget for subsidy payment.
Seinart maintained that the gains from the subsidy removal are expected to reach over N21 trillion between 2023 to 2025.
He also stated that the petrol subsidy removal is likely to lead to an increase in inflation in the upcoming months before contributing to disinflation in the medium term.
Seinart speaking on the exchange rate, emphasised that the previous foreign exchange management approach hindered investment and growth, contributed to inflation and undermined the efficacy of the monetary and fiscal policies.