Nigeria’s gains from subsidy removal, FX reforms to top N21trn by 2025: World Bank

With the removal of the subsidy and the implementation of FX reforms, the government is projected to achieve estimated fiscal gains of about N3.9 trillion in 2023, equivalent to 1.6 percent of GDP, the World Bank said on Tuesday.

“These gains are expected to reach over N21 trillion between 2023 and 2025, compared with a scenario in which the fuel subsidy had persisted,” the multilateral lender said in its Nigeria Development Update report. “However, fiscal risks remain elevated, as the government’s subsidy arrears to the NNPCL are estimated at N2.8 trillion.”

If the arrears are promptly settled, the fiscal savings for 2023 would be significant, resulting in a fiscal deficit increase of around 0.8 percentage points of GDP, reaching 5.9 percent, it said.

“Conversely, failure to sufficiently cover the arrears could potentially impact repairs and maintenance, security, and joint-venture cash calls, which could adversely affect oil production and revenue generation,” it added.

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