The World Bank has expressed its support for the Federal Government’s decision to remove subsidies and unify the country’s exchange rate.
President Bola Tinubu’s recent endorsement of these measures has further strengthened the support.
In a recent event organized by the World Bank to evaluate Nigeria’s economy, Dr. Subham Chadhuri, the Country Director, acknowledged that while the policy would cause some hardships, it is crucial for the country’s economic reconstruction.
He also emphasized the need for measures to alleviate the impact on the population going forward.
Dr. Chadhuri revealed that the World Bank’s concessional funding to Nigeria currently exceeds ten billion dollars, underscoring the organization’s commitment to supporting the country’s economic reforms.
Additionally, Alex Seinart, a lead economist at the World Bank, projected that the removal of fuel subsidies would result in fiscal gains of approximately 3.9 trillion Naira in 2023.
Seinart cautioned that the subsidy removal might temporarily increase inflation in the coming months but predicted that it would contribute to disinflation in the medium term.
Regarding the exchange rate, Seinart, the senior economist, highlighted the drawbacks of the previous foreign exchange management approach.
It hindered investment and economic growth, contributed to inflation, and undermined the effectiveness of monetary and fiscal policies.