Nigeria has started to benefit from significant policy reforms following the fiscal crisis that gripped it in 2020, but it needs to stay the course, the World Bank said on Thursday.
President Bola Tinubu has proposed reforms such as abolishing decades-old gasoline subsidies and devaluing the currency in an effort to increase production, which has been stagnant for about a decade.
The World Bank’s chief economist for Nigeria, Alex Schenaert, said Nigeria’s fiscal deficit had fallen from 6.2% of gross domestic product (GDP) in the first half of last year to 4.4% in the first half of this year, and that reforms had led to strong growth. Ta. These include stability in the service sector, stability in the oil sector, and improvement in the foreign exchange market.
“We are seeing fiscal consolidation through a reduction in the budget deficit, driven by a combination of near-constant spending and rapidly increasing revenues in real terms,” Siennato said in a presentation in the capital, Abuja.
“This jump in revenue was mainly due to the removal of the previous implicit foreign exchange subsidy, which was even bigger than the gasoline subsidy that we often talk about,” he said.
The World Bank predicts Nigeria’s economic growth rate will be 3.3% this year, rising to 3.6% in 2025.
Nigeria’s fiscal crisis was exacerbated by a combination of economic mismanagement and policy challenges after experiencing two economic recessions in the past eight years.
Recent reforms, such as a focus on price stability and the central bank’s unified market-reflecting exchange rate, have proven important in stemming the economic downturn, but have fueled inflation.
“The ultimate objective here is of course jobs and opportunity,” Schienert said.
