In an enlightening presentation at a recent event organized by the World Bank to evaluate Nigeria’s economic progress over the past six months, Alex Sienaert, the lead economist at the World Bank, unveiled a promising projection. According to Sienaert, Nigeria is expected to accrue savings of up to $5.1 billion (N3.9 trillion) in 2023 alone, following the removal of fuel subsidy and the implementation of foreign exchange market reforms.
During the event held in Abuja on Tuesday, Sienaert emphasized that these savings should not be regarded as a sudden financial windfall. Instead, they are the result of deliberate efforts to reform and improve the country’s economic landscape. The removal of fuel subsidy and the introduction of reforms in the foreign exchange market have played a pivotal role in driving these anticipated savings.
The economist further highlighted that the projected savings signify a substantial boost to Nigeria’s economy. The funds saved can be redirected towards critical areas such as infrastructure development, social welfare programs, and investment in key sectors, fueling further growth and progress.
He said, “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.’’
On the exchange rate, the World Bank Senior Economist said that the previous foreign exchange management approach impeded investment and growth, contributed to inflation and undermined the efficacy of the monetary and fiscal policies.
He said Nigeria should remove restrictions that had been placed on a list of 43 items, including sugar and flour, which the apex bank directed cannot be allocated dollars at the official rate, in order to deepen foreign exchange reforms.
Also, speaking at the occasion, the World Bank Country Director for Nigeria, Dr Subham Chadhuri, said the international financial institution is in support of the Federal Government’s removal of fuel subsidy and exchange rate unification.
Chadhuri explained that the policy, though painful, remains key to rebuilding the economy of the nation.
He further stated that the World Bank’s concessionary funding to Nigeria currently stands at over $10 billion.
Nigeria’s recently sworn-in President, Bola Tinubu, is embarking on the country’s biggest reforms in decades with the removal of the petrol subsidy and unification of the country’s multiple exchange rates.
Recall that President Bola Tinubu during his inaugural speech on May 29, 2023, announced that fuel subsidy is gone as there was no provision for that in the 2023 budget from July 1.
The President pledged his administration’s support to channel the money to provide basic infrastructural needs to Nigerians.
The CBN had on June 14, announced the unification of all segments of the forex market collapsing all windows into one. This was part of a series of immediate changes to operations in the Nigerian Foreign Exchange (FX) Market, in a bid to improve liquidity and stability.
