‘Audit NNPC, increase health taxes, VAT’ — World Bank tells FG
The World Bank has urged the federal government to strengthen its ongoing economic reforms by enforcing strict fiscal and monetary discipline to sustain recent stability in Nigeria’s economy.
In its latest Nigeria Development Update (NDU) released on Wednesday, the bank commended the progress made through the removal of petrol subsidies and the unification of the foreign exchange market.
However, it warned that the gains could easily be reversed if the government fails to ensure stronger policy coordination, transparency, and fiscal restraint.
According to the report, the Central Bank of Nigeria (CBN) must maintain positive real interest rates, limit monetisation of fiscal deficits, and improve transparency by publishing monthly statements of assets and liabilities.
“The Bank recommends increasing reliance on the Monetary Policy Rate (MPR) to control naira liquidity, complemented by open market operations and standing facilities.
“It also advised narrowing the corridor around the MPR, gradually reducing the cash reserve ratio to support financial sector development, and maintaining naira flexibility as a shock absorber against external pressures,” the statement read.
The World Bank further urged the CBN to implement and communicate a clear exchange rate policy with a defined framework for foreign exchange interventions.
On fiscal matters, the institution called for measures to boost government revenue and curb non-essential expenditure.
It recommended improving tax administration through e-invoicing, strengthening audits, adopting modern property tax systems at the state level, and increasing both health taxes and the value-added tax (VAT) rate in line with ECOWAS standards.
“Enhance fiscal governance, clear the backlog of federal government audits for 2022 to 2024, and adopt realistic budget assumptions,” the report advised.
The World Bank also suggested cutting unnecessary expenses such as vehicle purchases and trainings, and reducing ad-hoc deductions at the Federation Account Allocation Committee (FAAC) to improve fiscal stability at the subnational level.
On structural reforms, the lender encouraged the government to sustain deregulation of the petroleum sector, promote competition in fuel supply, and move toward a cost-reflective electricity tariff system supported by targeted subsidies for the poorest households.
It also called for a forensic audit of the Nigerian National Petroleum Company (NNPC) Limited and the adoption of modern procurement and audit laws to strengthen accountability in public finance.
