The World Bank has called on the federal government to conduct a comprehensive audit to reconcile outstanding debts owed by the Nigerian National Petroleum Company Limited (NNPC) to the Federation. This recommendation is part of broader measures aimed at deepening Nigeria’s ongoing economic reforms. The appeal was made in the latest Nigeria Development Update (NDU) report titled “Staying the Course: Progress Amid Pressing Challenges,” launched in Abuja on Thursday.
The bank also advocated for improved transparency in the reporting of oil revenues to the Federation Account Allocation Committee (FAAC), while urging the federal government to maintain a market-reflective pricing policy for Premium Motor Spirit (PMS).
Additionally, the report recommended reforms to Nigeria’s Value Added Tax (VAT) regime and the rationalization of tax expenditures. It also called for all foreign exchange (FX) transactions to be conducted at market-determined rates, and emphasized the importance of cutting non-essential government expenditures, such as vehicle purchases and external training programs.
During the NDU launch, the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, confirmed that PMS is now fully deregulated following the removal of a 40-year-old subsidy regime. He said, “For the first time in 40 years, the vexed issue of fuel subsidy, linked to the foreign exchange subsidy costing 5% of GDP, has been resolved. We now have market pricing of PMS, benefiting NNPC and the entire economy.”
However, Bauchi State Governor, Senator Bala Mohammed, expressed concerns about the economic hardships resulting from the reforms. He highlighted the adverse impacts on the populace, stating, “There is a lot of pain and hardship beyond the sub-nationals. The revenues coming in are not enough to address infrastructure and improve livelihoods. Nigerians are not enjoying this regime.”
In response, the World Bank’s Lead Economist for Nigeria, Alex Sienaert, emphasized the positive effects of the reforms on Nigeria’s economy, projecting GDP growth of 3.3% in 2024 and an average of 3.7% over 2025–2027. He stated, “Recent reforms are beginning to restore macroeconomic stability. However, these reforms need to be sustained for Nigeria to experience long-term benefits.”
The NDU report acknowledged that while the economic reforms were essential to stabilize the economy, they have placed short-term pressures on households and businesses. It also noted that inflation, driven by gasoline price increases and recent floods, remains high.
World Bank Country Director, Dr. Ndiame Diop, urged Nigerians to support the reforms, warning that reversing them could lead to severe consequences for the country’s fiscal stability. “If these reforms were not done, Nigeria would have fallen into a serious fiscal crisis, making it difficult for the government to meet its obligations to citizens,” Diop said.
The report also outlined key recommendations, including the continued removal of the fuel subsidy, increased transparency in the oil sector, and a focus on realistic budgeting to reduce debt risks and create space for development-focused spending.
Despite Governor Mohammed’s concerns, the World Bank maintained that the reforms would, in the long run, steer Nigeria towards economic prosperity and stability.
