By Milcah Tanimu
The World Bank has projected that rising inflation and low economic growth in Nigeria will result in an additional 2.8 million people falling into poverty by the end of 2023. The bank’s report, titled ‘Macro Poverty Outlook: Country-by-country Analysis and Projections for the Developing World,’ highlights the impact of high inflation, which reached a 17-year high of 24.1 percent in July 2023. Contributing factors include surging food prices and the temporary impact of removing the fuel subsidy. The report notes that the cumulative increase in the monetary policy rate since May 2022 has had limited success in curbing inflation due to clogged transmission channels and direct credit allocation by the central bank. The fiscal deficit has also risen, driven by increasing interest payments, higher capital spending, and the persistent high cost of the fuel subsidy. The World Bank predicts that public debt will reach 45 percent of GDP in 2023, with debt service exceeding total revenue. While the current account balance recorded a surplus in Q1 2023, it has not been sufficient to increase foreign reserves, posing challenges for economic stability. The report suggests that future economic growth in Nigeria will depend on the implementation of macro-fiscal and inclusive structural reforms. The World Bank expects inflation to moderate by 2024 and suggests targeted measures, such as cash transfers, to mitigate short-term adjustment costs for the poor and vulnerable.
