According to the recent Global Economic Prospects report on Tuesday by the World Bank, Nigeria’s fiscal position has waned as a result of increasing debt, cheap energy prices, slow development in oil production and and quietened oil sector activity. It also stated that the percentage dropped to 3.1% in 2022 with the prediction of more decline to 2.9% in 2023, this year.
As stated in the report, “Growth in Nigeria—the region’s largest economy—weakened to 3.1 per cent in 2022, a 0.3 percentage point downgrade from the June projection. Oil output dropped to 1 million barrels per day, down by over 40 per cent compared to its 2019 level, reflecting technical problems, insecurity, rising production costs, theft, lack of payment discipline in joint ventures, and persistent underinvestment.” This, the report says is partly as a result of the diversion of oil turnover to petrol financial support, roughly over 2% of the GDP in 2022.
Going forward, it was noted that the deficient economic development of 2.9% in this year will be scarcely above population growth which is usually believed to be around 2.5% in former reports stating that, “In Nigeria, growth is projected to decelerate to 2.9 percent in 2023 and remain at that pace in 2024—barely above population growth.”
The development motion in the other sectors, with the exclusion of oil sector, may probably be limited by the prolonged vulnerability of the oil sector. Security issues and temperate oil prices are anticipated to cause impediments in the recovery of oil production, according to the report.
It was also stated in the report that the uncertainty of policy, high inflation maintenance and increasing crime rate are expected to control development including agricultural growth which is anticipated to cause ease because of the impact of the previous year’s flood.
As a result of the aforementioned reasons, the country’s fiscal position is not expected to improve, according to the report.
The bank buttresses that debt maintenance and investors judgement further declined in some other countries which resulted in increment of borrowing costs and reduction in credit rating especially for countries like Nigeria and Ghana. So also is the issue of insecurity in the country which will affect easy access to food for the people thereby lessening economic growth.