David Malpass, the president of the World Bank Group, has issued a warning that Nigeria’s parallel exchange rate is detrimental since it exacerbates upcoming debt service payments and raises the possibility of debt distress.
According to the blog article, as of March 2023, Nigeria has an exchange rate premium of 61.7%. Parallel currency rates are expensive and might encourage corruption, according to the head of the World Bank.
Another issue is that some of the World Bank loan profits, which are paid out in dollars, may be used by governments to pay for expenses unrelated to the project and may therefore be susceptible to corruption.
He continued, saying that the bank had put in place several mechanisms to discourage subsidized rates and limit their impact.
“The new president of Nigeria, Bola Tinubu, on Monday, affirmed that the Central Bank of Nigeria would aim at harmonising Nigeria’s multiple exchange rates.