World Bank To Assist Nigeria Eradicate Regressive Subsidies
David Malpass, the president of the World Organization Group, has stated that the bank is prepared to assist Nigeria in eliminating regressive fuel subsidies while boosting social assistance for the underprivileged and disadvantaged.
He also emphasized the necessity of a single exchange rate in Nigeria, which would greatly enhance the country’s business-friendly environment, draw foreign direct investment, and lower inflation.
According to a statement posted on the Bank’s website on Thursday, Malpass made this statement during a meeting with Vice President Yemi Osinbajo of the Federal Republic of Nigeria.
Part of the statement read, “President Malpass encouraged a decisive move toward exchange rate unification and stabilization by Nigeria, highlighting the economic benefits for the Nigerian people. President Malpass emphasized to Vice President Osinbajo that a unified exchange rate will significantly improve the business enabling environment in Nigeria, attract foreign direct investment, and reduce inflation.”
According to the statement, Malpass and Osinbajo spoke about Nigeria’s Energy Transition Plan.
Malpass also praised Nigeria’s resolve to ensure that everyone has access to electricity and to reduce GHG emissions while maintaining a reliable baseload.
He also emphasized the significance of linking development and climate change, the necessity of an enabling policy and regulatory framework, and the need for improved institutions in the energy sector.
Malpass and Osinbajo also discussed the significance of raising domestic revenues through expanding Nigeria’s tax base and improving the effectiveness of tax administration.
The Nigerian Labour Congress and other interest groups threatened to hold protests in January of this year, but the Federal Government decided to keep the divisive fuel subsidies in place for an additional 18 months despite the advice of economists and multilateral organizations like the World Bank and International Monetary Fund.
It was reported that the cost of fuel subsidies was predicted to rise by 369.93% between 2021 and 2023.
The NNPC said that fuel subsidies consumed N1.43 trillion in 2021, despite the fact that January had no under-recovery data.
According to the Minister of Finance, the federal government anticipated spending N6.72 trillion on fuel subsidy payments in 2023.
Ahmed pointed out that the projection for subsidy payments was based on two scenarios: the first involved spending an estimated N6.72 trillion for the entire year; the second involved eliminating subsidies by June 2023, with the government spending N3.36 trillion rather than the entire N6.72 trillion.
She added that the estimated deficit amounts and net accretion to the federation account were affected by both scenarios.