The World Bank Group has advised Nigeria to reduce its borrowing from the Central Bank to alleviate inflationary pressure on the economy. Alex Sienaert, the World Bank’s Lead Economist for Nigeria, shared this recommendation during an economic review session at the Lagos Business School.
While commending the government for recent economic reforms, Sienaert emphasized the need for sustainable reforms to facilitate the country’s economic recovery and foster significant growth in the near future. He suggested several measures to tackle inflation, including reducing subsidised Central Bank lending to medium and large firms and the government’s borrowing from the Central Bank. By doing so, the money supply would decrease, leading to a reduction in inflation. Additionally, he proposed replacing imports with foreign exchange restrictions through tariffs.
Sienaert also discussed the government’s plan to disburse N8,000 as palliatives after removing fuel subsidies. He stated that this move would increase the available earnings and income of about 50 percent of Nigerians by 10 percent. Although there were criticisms about the amount not being sufficient, Sienaert argued that for many households earning less than N60,000 per month, the cash transfer would have a meaningful impact.
Recently, the Nigerian government announced its intention to transfer N8,000 to 12 million poor households over a six-month period to cushion the effect of fuel subsidy removal. However, organized labor and some economists expressed concerns about the adequacy of the amount to address the rising cost of living. The government has since reconsidered its plans and is reviewing the proposed cash transfer program.