By Adedapo Adesanya
The World Bank has projected a surge in the inflation rate in Nigeria following the removal of fuel subsidy and the floating of the Naira by the administration of President Bola Tinubu.
Nigeria’s inflation rose by 22.41 per cent last month, according to a new figures released by the National Bureau of Statistics (NBS) on June 15. It was higher than the 22.22 per cent recorded in April 2023.
Speaking at an event organised by the World Bank to assess the nation’s economy in the last six months on Tuesday, the Country Director for Nigeria, Dr Subham Chadhuri, explained that the policy, though painful, remains key to rebuilding the economy of the nation.
However, the lender declared its support for the subsidy removal and the exchange rate unification and advocated measures that will reduce the impact on the people going forward.
He further stated that the World Bank’s concessionary funding to Nigeria currently exceeds $10 billion.
Also speaking, a lead economist at the World Bank, Mr Alex Seinart, said the removal of the fuel subsidy is projected to achieve estimated fiscal gains of about N3.9 trillion in 2023.
The gains, according to him, are expected to reach over N21 trillion between 2023 to 2025.
The economist further projects that the petroleum subsidy removal is likely to lead to an increase in inflation in the upcoming months before contributing to disinflation in the medium term.
On the exchange rate, Mr Seinart said that the previous foreign exchange management approach impeded investment and growth, contributed to inflation and undermined the efficacy of the monetary and fiscal policies.
