The World Bank Group has urged Nigeria to reduce the government’s borrowing from the Central Bank, CBN if it wants to reduce the inflationary pressure on the economy.
World Bank’s Lead Economist for Nigeria, Alex Sienaert, stated this on Thursday during an economic review session at the Lagos Business School.
Sienaert noted that the new reforms by the government would have to be sustained for the economy to recover from present shocks and record considerable growth in the near future.
He said, “The whole agenda of tackling inflation is obviously a huge one. Some ideas include reducing subsidized CBN lending to medium and large firms and the government borrowing from CBN.
“All of these things increase the money supply and reducing that will be helpful to reduce inflation, and then replacing imports with FX restrictions with tariffs.”
Sienaert stated that the fact that the petrol price had significantly increased created pressure on the economy, adding that a variety of solutions would have to be devised in order to mobilize more revenue in a way that spending would be increased to tackle the real priorities in the country.
He also stated that the Federal Government’s plan to disburse N8,000 as palliatives following the fuel subsidy will increase the available earnings and income of about 50 percent of Nigerians by 10 percent.
According to him, many Nigerians would benefit from the extra cash from the government, since it would ensure that they did not have to skip a meal, pull a child out of school, or not go to the hospital.
Sienaert explained that the amount the government would spend on the cash transfer was not an enormous amount of money when compared to what it will gain from subsidy removal.
President Bola Tinubu recently disclosed that the federal government was planning to transfer N8,000 to 12 million poor households for a period of six months, to cushion the effect of fuel subsidy removal. A move the Nigeria Labour Congress, NLC, have said will not help an average Nigerian.
