Nigeria is in a more precarious position now than it was before the late 2021 global oil price boom. In 2022, the fiscal deficit was predicted to be 5.0% of GDP, exceeding the allowed federal fiscal deficit limit of 3%.
The cost of the gasoline subsidies climbed from 0.7% to 2.3% GDP in 2022. Due to this, the public debt stock has remained above 38% of GDP and the debt service to revenue ratio has increased from 83.2% in 2021 to 96.3% in 2022.
The bank added that around 13 million Nigerians will become impoverished between 2019 and 2025 due to the CBN’s naira redesign policy’s cash shortage, which hindered the nation’s attempts to reduce poverty.
Oil production is projected to remain subdued in part because of inefficiencies and insecurity. “The World Bank also said that the worsening economic environment in the country had pushed millions of Nigerians into poverty. The Washington-based bank further noted that macroeconomic stability has weakened considerably due to multiple FX rates, high and increasing inflation, rising fiscal pressures, and declining forex reserves.