Former World Bank president lauds Tinubu over forex reform, fuel subsidy removal

A former World Bank president, David Malpass, has commended President Bola Tinubu for his administration’s sweeping reforms in the nation’s foreign exchange market and the abolition of the fuel subsidy regime.

He said the actions are expected to enhance currency stability, combat inflation, and tackle corruption in Africa’s most populous nation.

Mr Malpass, while expressing satisfaction and optimism about Mr Tinubu’s steps in a tweet Wednesday, highlighted the impact of the policy reset on the country’s economy.

“Glad to see @officialABAT taking concrete steps to scrap Nigeria’s harmful government subsidies and multiple exchange rates.

“These are important steps toward currency stability, lower inflation, and reduced corruption in Africa’s most populous country,” he tweeted.

Policy reforms

Since he assumed office on 29 May, Mr Tinubu has seen the implementation of a policy reset long sought by investors, experts and global development organisations.

At his inaugural address at Eagle Square, Abuja, the president declared that there would no longer be a petroleum subsidy regime as it was not sustainable.

The removal of the subsidy led to an over 100 per cent increase in petrol prices nationwide, as Nigerians struggled with the multiplier effect of the policy.

Nigeria has for decades spent trillions of naira on petrol subsidy amid shrinking revenues and other fiscal constraints. In 2022, over N4 trillion was spent on petrol subsidy, more than the government spent on education and healthcare.

However, critics of the fuel subsidy removal argue that it will further weaken the purchasing power of Nigerians and impoverish more citizens in a country where almost half of the population is poor.

Apart from the reform in the petroleum sector, the Tinubu government also sought to unify the nation’s multiple exchange rates as part of measures to draw investors into the economy.

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The Central Bank of Nigeria, on 14 June, announced the unification of all segments of the Nigerian forex market, collapsing all windows into the Investors & Exporters (I&E) window.

In recent years, experts and global financial institutions have raised concerns about the nation’s opaque exchange rate regime, calling for unifying the numerous windows.