Nigeria to save N3.9trn  in 2023  from subsidy removal, FX unification, says World Bank

By Cynthia Ezekwe

The World Bank has projected that Nigeria will save N3.9 trillion in 2023 following the fuel subsidy removal and foreign exchange (FX) unification by the Bola Tinubu administration.

Alex Sienaert, chief economist at World Bank, made this known  at the launch of the Nigeria Development Update for June 2023 titled, “seizing the opportunity.”

“The recently undertaken PMS subsidy and  FX reforms are historic, N3.9 trillion in savings in 2023 alone, stops Nigeria from going over a fiscal cliff and sets the stage for a new, upward investment, growth, and development trajectory,”  Sienaert said.

He noted that while inflation will be higher in 2023, it will be lower in 2024-2025 If the right policy mix is sustained.

The chief economist pointed out  that  the subsidy removal will prevent  further deterioration, adding that savings from the subsidy can also be used for other services such as health, education, infrastructure, among others.

Siernat also said that Nigeria’s debt to GDP ratio will increase to 46 percent, as he noted that the FG will be paying off subsidy arrears to NNPCL will reduce the fiscal savings for 2023, in addition to other debts that must be serviced.

He added that if the savings from subsidy removal are not well utilized, over 7 million Nigerians will be further thrown into the poverty net.

On his part, Seyi Makinde, governor, Oyo state noted that social protection programmes must be put in place, with a systemic approach towards long term objectives, to ensure that the reforms meet the target.