The World Bank has voted in favour of a $2.25 billion financial support package for Nigeria that will serve as a much-needed boost to the country’s economic reforms. It comes two weeks after Finance Minister Wale Edun spoke about the need to stay the course after tough reforms like the removal of fuel subsidy and a long-running currency peg accelerated inflation.
“Our economy has been in desperate need of reform for decades. It has been unbalanced because it was built on the flawed foundation of over-reliance on revenues from the exploitation of oil,” President Tinubu said on June 12, a public holiday to celebrate democracy. He has pledged to raise revenues and tackle inflation.
“The approved operations include $1.5 billion for the Nigeria Reforms for Economic Stabilization to Enable Transformation (RESET), Development Policy Financing Program (DPF) and $750 million for the Nigeria Accelerating Resourcer Mobilitation Reforms (ARMOR),” a statement from the Minister’s office said.
Ousmane Diagana, the World Bank Vice President for Western and Central Africa, said “Nigeria’s comprehensive macro-fiscal reforms are placing the country on a new path that can stabilize the economy and lift people out of poverty.”
Despite some early reforms, economic analysts have criticised the government’s follow-through. After an initial removal of fuel subsidy, a foreign exchange rate spike and a rise in global oil prices forced the government to begin quietly paying subsidies.
And despite a free float of the naira and several interest rate hikes, FX prices have remained unpredictable, swinging wildly in February, gaining ground in March before losing momentum again by the end of April.
FX prices have partly contributed to the acceleration of inflation and multiple taxes and excise duties on food products and other goods have not been removed. A presidential task force has recommended the removal of several taxes and expects to see progress by the end of the year.
*This is a developing story
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