World Bank Highlights Positive Outcomes from Nigeria’s Fiscal Reforms Amidst Economic Challenges

Despite economic hardship, the World Bank sees encouraging progress from Nigeria’s recent fiscal policies and reforms

While many Nigerians express concern over the economic challenges resulting from recent policy changes, Nigeria’s fiscal reforms show positive results according to the World Bank. The international institution reported that the country is beginning to experience the benefits of significant fiscal adjustments aimed at steering the economy away from a near-crisis.

President Bola Tinubu’s administration has enacted pivotal reforms, including the removal of a long-standing petrol subsidy and the devaluation of the naira, all intended to boost productivity. Although these measures have been painful for many citizens, the World Bank emphasized that Nigeria’s fiscal reforms show positive results in stabilizing key sectors of the economy.

Alex Sienaert, the World Bank’s lead economist for Nigeria, highlighted that the country’s fiscal deficit has dropped from 6.2% of Gross Domestic Product (GDP) in the first half of last year to 4.4% in the same period this year. He credited the positive outcomes of Nigeria’s fiscal reforms for driving growth in service sectors, stabilizing the oil industry, and improving the foreign exchange market.

“This fiscal consolidation is largely due to a surge in revenues following the removal of the implicit forex subsidy, which was even more significant than the petrol subsidy,” Sienaert said during a presentation in Abuja. The fiscal reforms are also expected to spur economic growth, with the World Bank projecting a GDP increase to 3.3% this year and 3.6% by 2025.

However, despite the progress, Sienaert acknowledged the pain felt by citizens, as inflation has surged in the wake of these policy changes. He emphasized that the reforms are ultimately aimed at creating jobs and economic opportunities, which will benefit Nigerians in the long term.