© Reuters. FILE PHOTO: Nigeria’s President Bola Tinubu looks on after his swearing-in ceremony in Abuja, Nigeria May 29, 2023. REUTERS/Temilade Adelaja/File Photo
By Chijioke Ohuocha and Elisha Bala-Gbogbo
ABUJA (Reuters) – Nigeria could save up to 3.9 trillion naira ($5.10 billion) this year alone after reforms to its foreign exchange market and the removal of a petrol subsidy, the World Bank said on Tuesday.
Nigerian President Bola Tinubu, who is embarking on the country’s biggest reforms in decades to tackle issues including a high debt burden, scrapped the popular but expensive petrol subsidy when he took office last month.
The central bank has unified the country’s exchange rates, following Tinubu’s criticism of a currency regime that had hampered Africa’s biggest economy for years.
World Bank lead economist for Nigeria Alex Sienaert said during a presentation in the capital Abuja that the savings did not amount to a fiscal windfall but put Africa’s most populous nation on an upward trajectory.
“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,” Sienaert said.
The World Bank and International Monetary Fund had for years called on Nigeria to remove the petrol subsidy, which cost $10 billion last year, and to free its exchange rate.
To deepen foreign exchange reforms, Siernaet said Nigeria should remove forex restrictions on a list of 43 items, including sugar and flour, that the central says cannot be funded from official dollar sales.
Siernaet said some four million more Nigerians may have been driven into poverty in the first five months of this year due to inflation, which reached 22.41% in May.
Labour unions are pressing Tinubu’s government to raise the monthly minimum wage more than six fold to cushion workers against the impact of the fuel subsidy removal.
After two decades of uneven growth, Nigeria has the second- largest population of poor people in the world and is one of the least developed countries globally, the World Bank says.
($1 = 765.00 naira)