By 2025, Nigeria Govt. Will Save N11trn From Subsidy Removal — World Bank

The World Bank says with the recent petrol subsidy removal policy, the Federal Government will save a total of N11 trillion.

The financial body however said more people would be pushed into poverty in Nigeria if the government does not provide palliatives to alleviate the effect of the implemented reforms.

The Nigeria Development Update (NDU) in its latest report, Bretton Woods institution said over four million people were pushed into poverty between January and May 2023.

In the Bank’s report, titled ‘Seizing the Opportunity,’ it said it was important for the country to implement a comprehensive reform package that encompasses a range of complementary measures, including a new social compact to protect the poor and most vulnerable, to maximise the collective impact on growth, job creation, and poverty reduction.

According to the World Bank, it could be a window of opportunity that would have a transformative impact on the lives of millions of Nigerians and establish a solid foundation for sustainable and inclusive growth.

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“The removal of the petrol subsidy and foreign exchange (FX) management reforms are crucial measures to begin to rebuild fiscal space and restore macroeconomic stability, and the opportunity should be seized to take further, necessary policy reform steps.

“In the first part of 2023, Nigeria’s economic growth weakened, and real gross domestic product (GDP) growth fell from 3.3 percent in 2022 to 2.4 percent year-on-year (y-o-y) in Q1 2023. The challenging global economic context has put pressure on Nigeria’s economy.

“However, domestic policies play a major role in determining Nigeria’s economic performance and resilience to further external shocks. The previous mix of fiscal, monetary, and exchange rate policies, including the naira redesign program, did not deliver the desired improvements in growth, inflation, and economic resilience.

“The new government has recognised the need to chart a new course and has already made a start on critical reforms, such as the elimination of the petrol subsidy and reforms in the FX market.

“With the petrol subsidy removal, the government is projected to achieve fiscal savings of approximately N2 trillion in 2023, equivalent to 0.9 percent of GDP. These savings are expected to reach over N11 trillion by the end of 2025,” the report read.