… fails to implement W/Bank suggestions
Nigeria’s inflation rate has surged for the eighth consecutive month, hitting a fresh 17-year-high amid rising food and energy costs, and the continued depreciation of the naira.
This may perhaps be because the country fail to implement some of the suggestions the World Bank has made in respect of certain areas, such as the removal of subsidies on petrol, having a coordinated exchange rate, and catalyzing private investments through foreign exchange management,
According to data from the National Bureau of Statistics, inflation rose to 20.77 percent in September from 20.52 percent recorded in August, the highest since 2005.
Food inflation rose 23.34 percent year-on-year compared with 23.1 percent in August, while core inflation increased to 17.6 percent in September from 17.2 percent in August.
Meanwhile, upward pressures may see the Central Bank of Nigeria’s Monetary Policy Committee raise borrowing costs for the fourth successive time in November.
The June edition of Nigeria Development Update (NDU) prepared by the World Bank, predicted that inflation in Nigeria, already one of the highest in the world before the war in Ukraine, and it is likely to increase further due to the rise in global fuel and food prices caused by the war. And that is likely to push an additional one million Nigerians into poverty by the end of 2022, on top of the 6 million Nigerians that were already predicted to fall into poverty this year due to the rise in prices, particularly food prices.
, The report also states that the inflationary pressures will be compounded by the fiscal pressures Nigeria will face this year because of the ballooning cost of gasoline subsidies at a time when oil production continues to decline.
The report, titled “Time for Business Unusual” highlights urgent policy priorities that can be implemented over the next 3 to 6 months in four key areas: (1) eliminating the PMS subsidy while protecting poor and vulnerable households from any inflationary impact; (2) reducing inflation through a coordinated mix of exchange rate, trade, monetary and fiscal policies; (3) catalyzing private investment by enhancing foreign exchange management, easing trade restrictions, and fostering a better business environment; and (4) addressing fiscal pressures through enhanced domestic revenue mobilization and reducing the reliance on CBN deficit financing.
The Nigeria Development Update (NDU) is a World Bank report series produced twice a year around Spring and Fall. The NDU assesses recent economic and social developments and prospects in Nigeria, and places these in a longer-term and global context. It also provides an in-depth examination of selected economic and policy issues and an analysis of Nigeria’s medium-term development challenges. It is intended for a wide audience, including policy makers, business leaders, financial market participants, and the community of analysts and professionals engaged in Nigeria’s evolving economy.
