*Warns of dire consequences in coming days
The World Bank has declared that the Central Bank of Nigeria (CBN) policies are undermining the business environment within the country, placing Nigeria on a fiscal time bomb.
The global financial institution listed multiple exchange rates, trade restrictions, and the financing of the public deficit as some of the policies that needs to be reviewed, if not, they would extend Nigeria’s long-standing weaknesses.
According to the World Bank in its June report titled ‘Nigeria Development Update (June 2022): The Continuing Urgency of Business Unusual‘, the CBN policies are weakening revenue mobilization and foreign investment.
The document reads that “due to the petrol subsidy and low oil production, Nigeria faces a potential fiscal time bomb” after the Federal Government failed to take advantage of the pandemic and lockdown to end the money spent to subsidise petrol importation.
“Multiple exchange rates, trade restrictions, and financing of the public deficit by the Central Bank of Nigeria (CBN) continue to undermine the business environment. These policies augment long-standing weaknesses in revenue mobilization, foreign investment, human capital development, infrastructure investment, and governance,” the report reads.
“Notably, during 2020 and 2021, when oil prices were much lower, the government lost an opportunity to address one of the primary sources of fiscal vulnerability by choosing to maintain the subsidy for premium motor spirit, more commonly known as petrol—a subsidy that is unique, opaque, costly, unsustainable, harmful, and unfair”, the World bank stated.