•Insists deepening reforms critical in mitigating COVID-19 crisis
The World Bank will next Monday deliberate on a fresh loan request of a total of $1.5 billion by states in Nigeria.
The World Bank Country Director for Nigeria, Shubham Chaudhuri, while responding to a THISDAY question during the virtual presentation of the latest Nigeria Development Update (NDU) by the multilateral institution, however, said the other part of the loan request, which is the federal government’s demand for $1.5 billion budget support, is “still in the works.”
“The $1.5 billion request is slated for presentation to our board next week (on Monday) actually, for approval. That is two separate $750 million request. One of them is to support the states’ fiscal resources, but on a performance-based mechanism. Also, it is for financing states’ fiscal transparency, accountability and sustainability programme.
“And the other is meant to support the respond of the states towards protecting livelihoods, food security and local economic activities. So, those are the two requests that are going to be considered by our board by Monday,” he stated.
Meanwhile, the Washington-based institution in the NDU predicted that in the next three years, an average Nigerian could see a reversal of decades of economic growth and the country could enter its deepest recession since the 1980s.
The bank, however, said the forecast could be avoided if progress in the current reforms could be sustained and the right mix of policy measures is implemented.
The report titled: “Rising to the Challenge: Nigeria’s COVID response,” took stock on the recently implemented reforms and proposes policy options to mitigate the impact of COVID-19 and foster a resilient, sustainable and inclusive recovery.
It projected that the Nigerian economy could shrink up to four per cent in 2020, following the twin shocks of COVID-19 and low oil prices. The pace of recovery in 2021 and beyond remains highly uncertain and subject to the pace of reforms, the report stated.
It noted that the pandemic was disproportionately affecting the poor and most vulnerable, women in particular, adding that in the absence of measures to mitigate the impact of the crisis, the number of poor could increase by 15 to 20 million by 2022.
“Food insecurity has increased substantially and economic precarity is on the rise because unemployed workers have migrated to the low-productivity agricultural sector. The NDU acknowledges measures taken by the government since April, including the efforts to harmonise exchange rates, introduce a market-based pricing mechanism for gasoline, adjust electricity tariffs to more cost-reflective levels, and reduce non-essential expenditures and redirect resources towards the COVID-19 response.
“It also highlights the greater transparency in the oil and gas sector and public debt as essential steps for a resilient recovery,” it added.
The NDU recommended policy options in five areas to help mitigate the effects of the crisis and support Nigeria’s recovery.
These include managing the domestic spread of COVID-19 until a vaccine is available for distribution; enhancing macroeconomic management to boost investor confidence; safeguarding and mobilising revenues; re-prioritising public spending to protect critical development expenditures, and supporting economic activity and access to basic services and providing relief for poor and vulnerable communities.
“Nigeria is at a critical historical juncture, with a choice to make. Nigeria can choose to break decisively from business-as-usual, and rise to its considerable potential by sustaining the bold reforms that have been taken thus far and going even further and with an even greater sense of urgency to promote faster and more inclusive economic growth,” Chaudhuri added.
On his part, World Bank Lead Economist for Nigeria and co-author of the report, Marco Hernandez said: “Nigeria can build on its reform momentum to contain the spread of COVID-19, stimulate the economy and enable the private sector to be the engine of growth and job creation. It can also redirect public spending from subsidies that benefit the rich towards investments in Nigeria’s people and youth in particular and lay foundations for a strong recovery to help make progress towards lifting 100 million people out of poverty.”