The World Bank has recommended a single foreign exchange (Forex) market, urging Nigeria to do away with its multiple Forex markets.
In its latest ‘Macro Poverty Outlook for Nigeria: April 2023’, the World Bank said unification of the forex markets should be one of the reforms to strengthen the recovery of the country’s economy.
According to the global financial institution, the foreign exchange reform will restore macroeconomic stability which the bank said has weakened due to exchange rate distortions.
Although, the World Bank also cited declining oil production, costly fuel subsidies, and monetization of the fiscal deficit as reasons for weak macroeconomics.
“Macroeconomic stability has weakened amidst declining oil production, costly fuel subsidies, exchange rate distortions, and monetization of the fiscal deficit.
The authorities can strengthen the economy by restoring macroeconomic stability through reforms to increase oil and non-oil revenues, tighten monetary policies to reduce inflation and unify the multiple FX windows and adopt a single, market-responsive exchange rate,” the report said.
The World Bank’s advice is in line with the plan of the President-elect, Bola Tinubu, who has also spoken in favor of foreign exchange reform.
The President-elect said he would work with the Central Bank of Nigeria (CBN) to bring down the exchange rate to N200 in his first term.