Adaobi Rhema Oguejiofor
The World Bank has said that Nigeria will save more than $28 billion, which is equivalent to N21 trillion, in two years after scrapping petrol subsidy and allowing its currency to weaken.
A report by the Washington-based lender disclosed that the savings will help President Bola Ahmed Tinubu’s administration to cut its record fiscal deficit and a debt-service burden that surpassed its revenue in 2022.
The report revealed that the budget shortfall will narrow down from 5.1 percent, which is what is obtainable this year to 3.9 percent of gross domestic product by 2025.
According to the World Bank, scrapping the fuel cap will enable the Nigerian National Petroleum Company (NNPC) Limited to export crude oil instead of setting it aside to pay for subsidy and easing foreign-exchange controls will also help the government convert overseas earnings at market prices, rather than at “overvalued” rates.
The Bank also predicts that Africa’s biggest economy will expand by 4 percent from 2024 if it implements the urgently required reforms, adding that Nigeria has for years resisted calls by the Bank to do away with its costly gasoline subsidies and myriad exchange rates that have hindered growth.
“Africa’s largest crude producer should take further steps in order to increase non-oil revenue, lower inflation and expand the social safety net to protect the poor and most vulnerable.
“The government could propose a compact with Nigerian citizens that directly links the phased-out subsidy to compensatory cash transfers,” the World Bank said.