The World Bank said on Thursday that the removal of petrol subsidies in Nigeria was an important step in the midst of the CovID 19 crisis.
The Bank, in
its "Africa's Pulse" report, entitled "Charging the Road to
Recovery", said that sub-Saharan African countries should take advantage
of the crisis to accelerate their structural reform agenda. Taking advantage
He said,
"The Covid-19 crisis is not being wasted in the countries of the region;
in Nigeria, the government has taken important steps to reform its subsidized
government.
The World Bank
noted that the Nigerian government has abolished petrol subsidies and
introduced market-based pricing mechanisms without any price limit.
"The
price of petroleum (petrol) is determined each month by the Petroleum Products
Pricing Regulatory Agency based on market costs," it said.
When the
prices of international petroleum products begin to rise, the PPPRA will allow
prices to rise accordingly.
Punch had said
on September 8 that the abolition of petrol subsidy by the federal government
and increase in electricity rates was in line with the reforms sought by the
International Monetary Fund and the World Bank.
In a report on
August 17, Reuters quoted sources as saying that the World Bank is unlikely to
approve the much-needed 1.5 1.5 billion for Nigeria in August due to concerns
about the desired reforms.
Fuel subsidies
and electricity tariffs are also being discussed’ Reuters reported, with a
banking source saying the loan could not be’ approved until October.
The World Bank
predicted on Thursday that sub-Saharan Africa's real GDP would contract to 3.3
percent this year, after growing 2.4 percent in 2019.
It said,
"In Nigeria, after an annual growth of 1.9% in 2020 Q1, the annual GDP
contracted by 6.1 years in 2020 Q2, with growth in the oil and non-oil sectors
slowed.
"The
short-term outlook faces considerable uncertainty as the economy continues to
be gripped by the effects of epidemics."
The report
said that the activity data shows that the uptrend in activity starting in Q3
2020 has stopped.
"Despite
the uncertainty, investment is weak. It added that growth would slow to 4.1
percent in 2020 and 0.3 percent in 2021.
According to
the World Bank, although Nigeria's public debt is expected’ to rise, it is
expected’ to remain below 30% of GDP in 2020.
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