World Bank to Tinubu: Use Subsidy Savings to Lessen Suffering according to the news reaching us at 9ja2nice latest news department on the headlines World Bank to Tinubu: Use Subsidy Savings to Lessen Suffering.
The World Bank has urged the Tinubu-led Federal Government to use part of the savings from fuel subsidy removal to reduce the suffering of Nigerians worsened by the negative impact of the policy.
Making this call in its latest Nigeria Development Update, NDU, released yesterday, the World Bank noted that an additional 7.1 million Nigerians would be pushed into poverty, especially without measures to compensate for the negative impact of subsidy removal on the populace.
The removal of the petrol subsidy and foreign exchange (FX) management reforms, according to the World Bank, 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.
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In the NDU report, titled “Seizing the Opportunity”, The World Bank said that it is critical to implement a comprehensive reform package encompassing a range of complementary measures, including a new social compact, to protect the poor and most vulnerable, to maximize the collective impact on growth, job creation, and poverty reduction.
It added: “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 programme, did not deliver the desired improvements in growth, inflation, and economic resilience.
“The new government has recognized the need to chart a new course and has already made a start on critical reforms, such as the elimination of 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% of GDP. These savings are expected to reach over N11 trillion by the end of 2025.
The World Bank stated: “In the immediate term, the removal of the petrol subsidy has caused an increase in prices, adversely affecting poor and economically insecure Nigerian households.
‘’Petrol prices appear to have almost tripled, following the subsidy removal. The poor and economically insecure households who directly purchase and use petrol as well as those that indirectly consume petrol, are adversely affected by the price increase.
‘’Among the poor and economically insecure, 38 per cent own a motorcycle and 23 per cent own a generator that depends on petrol. Much more use petrol-dependent transportation.
“The poor and economically insecure households will face an equivalent income loss of N5,700 per month, and without compensation, an additional 7.1 million people will be pushed into poverty.
Highlighting measures to reduce the negative impact of the subsidy removal on Nigerians, the World said: “Compensating transfers will be essential in helping to shield Nigerian households from the initial price impacts of the subsidy reform.
“In addition to providing immediate cash compensation, the government could also elaborate on the use of the freed-up resources in a new compact with the Nigerian people, outlining support in the immediate as well as medium and long term, at the federal, state, and local government levels.
