World Bank Recommends Audit of NNPC

By Adedapo Adesanya

The World Bank has urged the federal government to carry out an audit to reconcile what the Nigerian National Petroleum Company (NNPC) Limited owes the country as part of overall measures to sustain and deepen the current economic reforms.

These were contained in the latest Nigeria Development Update (NDU) report, which was launched by the World Bank in Abuja.

It also called for improved reporting of oil revenues to the Federation Account Allocation Committee ((FAAC) as well as the maintenance of a market-reflective price on Premium Motor Spirit (PMS).

In the report titled Staying the Course: Progress Amid Pressing Challenges, the lender also urged the federal government to ensure that the gains from the removal of PMS subsidy were flowing to the federation as well as reform the Value Added Tax (VAT) regime and rationalise tax expenditures.

The bank equally urged the federal government to ensure that all FX-related transactions occur at the market determined exchange rate, cut wasteful expenditures that are not essential, including purchase of vehicles, and external training, among others.

According to the NDU report, since May 2023, Nigeria has implemented significant reforms to stabilise its economy, resulting in modest growth, improved fiscal health, and rising foreign exchange reserves.

However, it observed that while these measures were necessary to urgently avert a fiscal crisis and place Nigeria on a stronger development path, they have imposed short-term pressures on households and businesses.

The report underscored the need to sustain these policies while addressing structural issues to combat inflation and promote long-term investment, growth, and job creation.

The report stated that positive results from these reforms were beginning to show at the macroeconomic level, adding that it was still early to conclude.

It cited output growth which has remained modest overall but inched higher through mid-2024 as oil sector output has stabilised and activity in some services has been robust.

It noted that the fiscal position is also improving, with the federal government’s fiscal deficit narrowing to 4.4 per cent of Gross Domestic Product (GDP) in the first half of 2024 from 6.2 per cent in the first half of 2023, helping to mitigate debt-related risks.

“Foreign exchange reserves – a buffer against external shocks – have risen from $32.9 billion at the end of 2023 to more than $38.8 billion by mid-October 2024.

“However, inflation remains high, and inched up again in September 2024, mainly due to the most recent gasoline price increases and recent floods,” the report said.