In a recent report, the World Bank paints a sobering picture of Nigeria’s economic landscape, anticipating a grim consequence of 2.8 million additional people slipping into poverty by the close of 2023.
Titled ‘Macro Poverty Outlook: Country-by-country Analysis and Projections for the Developing World,’ the report underscores the profound impact of soaring inflation, which soared to a 17-year high of 24.1 per cent in July 2023.
The surge is attributed to escalating food prices and the temporary repercussions of fuel subsidy removal.
The report highlights the limitations of cumulative increases in the monetary policy rate since May 2022, citing clogged transmission channels and direct credit allocation by the central bank as impediments to curbing inflation.
Furthermore, the fiscal deficit has swelled due to escalating interest payments, increased capital spending, and the persistent high cost of the fuel subsidy.
Projections indicate that public debt will skyrocket to 45 per cent of GDP in 2023, surpassing total revenue in debt service.
Despite a surplus in the current account balance in Q1 2023, the inability to bolster foreign reserves poses a significant challenge to economic stability.
The report posits that the key to future economic growth in Nigeria lies in the implementation of comprehensive macro-fiscal and inclusive structural reforms.
The World Bank envisions a moderation in inflation by 2024 and recommends targeted measures, such as cash transfers, to alleviate short-term adjustment costs for the impoverished and vulnerable.