World Bank President David Malpass has described subsidies as expensive saying they do not get to those targeted.
The World Bank President said this when he fielded questions from journalists on the sidelines of the ongoing Spring Meeting of the intentional lender in the US.
The World Bank and the International Monetary Fund (IMF), over the years, continues to warn Nigeria over its petrol subsidy saying it has become unsustainable.
Data from the Debt Management Office (DMO) revealed that there has been a substantial drop in government revenue occasioned by high oil price and Nigeria’s inability to meet its oil quota is partly caused by pipeline vandalism and oil theft.
“Generalized subsidies have significant negatives. One is, they are expensive because they go to everyone, and they’re often taken–more used by people with upper incomes than by people with lower incomes; they’re not targeted.
“So, we encourage, when there needs to be a subsidy for either food or for fuel, that it be carefully targeted, well targeted for those most in need. And we have encouraged Nigeria to rethink its subsidy effort,” Malpass said.
Early in January, the federal government had announced it was halting subsidy on petrol only for it to reverse itself following pressures from organised labour, while many
attributed it to political considerations.
In a revised 2022 budget proposal sent to the National Assembly, the Executive has proposed a subsidy figure of about N4 trillion, about N1 trillion more than the N3 trillion it earlier budgeted.
Nigeria’s general elections come up in February 2023.
Malpass further said that for the Nigerian economy to develop, the authorities must adopt a single exchange rate that is market based. According to him, that is what would attract investments.
He also said there was need for discipline by the fiscal and monetary authorities.
In the area of trade, the World Bank President noted that Nigeria has trade barriers that distort trade flows. He urged the government to improve substantially in order to help Nigerians move forward.
“I do take note of the complicated situation that they face. Nigeria has a huge opportunity because of its natural resources and because of its people, and I think it could see its growth accelerate with improvements in policy,” he said.
