The President of the World Bank Group, David Malpass, has said that the bank is ready to support Nigeria in phasing out regressive fuel subsidies while increasing social assistance for the poor and vulnerable.
This is according to a statement recently published on the Bank’s website which gave insight into the meeting between Malpass and Vice President Yemi Osinbajo of the Federal Republic of Nigeria
Malpass also stressed the need for a unified exchange rate in Nigeria, which would significantly improve the business-enabling environment in Nigeria, attract foreign direct investment, and reduce inflation.
What the World Bank is saying
The statement reads “President Malpass emphasized the importance of integrating climate and development, as well as the need for an enabling policy and regulatory environment alongside strengthened institutions in the energy sector. President Malpass affirmed to Vice President Osinbajo the WBG’s readiness to support Nigeria in phasing out regressive fuel subsidies, while increasing social assistance for the poor and vulnerable.”
President Malpass and Vice President Osinbajo discussed Nigeria’s Energy Transition Plan. Malpass also welcomed Nigeria’s commitment to achieving universal energy access and reducing GHG emissions while maintaining reliable baseload.
On the exchange rate crisis, President Malpass encouraged a decisive move toward exchange rate unification and stabilization by Nigeria, highlighting the economic benefits for the Nigerian people.
“President Malpass emphasized to Vice President Osinbajo that a unified exchange rate will significantly improve the business enabling environment in Nigeria, attract foreign direct investment, and reduce inflation. President Malpass and Vice President Osinbajo also discussed the importance of increasing domestic revenues through broadening Nigeria’s tax base and increasing the efficiency of tax administration,“ the statement added.
What you should know
The Federal Government of Nigeria (FGN) has estimated petrol subsidy payment at N6.72 trillion for the full-year 2023. This was disclosed by the Ministry of Finance at the Public Consultative Forum on the 2023-2025 Medium-Term Fiscal Framework.
In April, following the approval of a revised 2022 budget by the Nigerian Senate, there was an upward review of the budget amount for Premium Motor Spirit (PMS) subsidy for 2022 by N442.72billion, from N3.557 trillion to N4 trillion.
The costs of fuel subsidy in Nigeria increased by 890% over a five-year period (2017-2021) in Nigeria even though fuel prices have only increased by 12.1%.
Nairametrics reported that the Central Bank of Nigeria (CBN) has stated that the Federal Government of Nigeria (FGN) needs to “jettison the current fuel subsidy policy” due to the high cost to the economy.
The Federal Government has been obligated to continue providing gasoline subsidies, which have risen over time, in an effort to keep fuel prices low. For the entire year 2023, the Federal Government of Nigeria (FGN) expects to pay N6.72 trillion in fuel subsidies.