The World Bank has revealed that the Nigerian Government incurred a loss of N13.2 trillion to foreign exchange (FX) subsidy in the last three years.
Recall that the foreign policy has helped in keeping the Naira at a lower rate over the years by successive Governments.
However, the FX regime came to end when President Bola Tinubu-led government in June 2023 floated the local currency. The President quashed the subsidy regime in foreign exchange allocation.
The repercussion of the FX policy has been responsible for the sharp decline in the value of the Naira. With the nation’s currency, now exchanging at over N1,600 to one Dollar. This was against where the currency was in 2023 at less than N500 when Tinubu administration took over.
In its latest Nigeria Development Update (NDU) report, the World Bank disclosed that the country lost N13.2 trillion as a total FX subsidy between 2021 and 2023.
A breakdown from the report showed that N2 trillion was lost in 2021. While N6.2 trillion was lost in 2022 and N5 trillion in 2023.
According to the Washington-based institution, the FX subsidy “benefitted certain groups at the expense of the entire country”.
Report stated, “Quantifying the fiscal cost, through forgone revenue of multiple exchange rates: Prior to the full FX unification in February 2024, the presence of a parallel FX premium generated enormous fiscal costs, in the form of forgone revenues.”
source: Daily Trust
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