Publication: Nigeria Biannual Economic Update, April 2018: Connecting to Compete
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2018-04
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2018-04
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The Nigeria Biannual Economic Update is a product of the staff of the World Bank and has three broad aims. First, it reports on the key developments in the Nigerian Economy in the recent past Secondly, it summarizes the likely economic outcomes in the short-to-medium term, given the policy developments, and highlights key short-term risks and upside potentials. Finally, the Update provides a more in-depth examination of selected highly relevant economic issues. The Nigeria Biannual Economic Update is intended for a wide audience, including policy makers, business leaders, financial market participants, and the community of analysts and professionals engaged inNigeria’s economy.
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“World Bank Group. 2018. Nigeria Biannual Economic Update, April 2018: Connecting to Compete. © World Bank. http://hdl.handle.net/10986/29787 License: CC BY 3.0 IGO.”
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The oil price shock of late 2014 and its aftermath pushed the economy into recession and precipitated a major budgetary crisis at the national and state levels which brought to light the longer-term trend of weak domestic revenue mobilization. Nigeria’s weak revenue mobilization has major implications for growth and development, including for improving its dire social service delivery outcomes. Thus, the country needs to take concrete steps to break its oil dependency to improve its economic and social outcomes. Oil revenues are recovering with increasing oil prices, but distributions to the tiers of government are constrained by the unbudgeted fuel subsidy and other deductions. The fuel subsidy, no longer an explicit first line deduction from oil revenues, mostly benefits the affluent and it is also widely-known that a portion of Nigeria’s imported petrol is smuggled out to neighboring countries where petrol is more expensive. The constrained net oil revenues, combined with non-oil revenues that are constrained by limited tax policy reforms and are thus stagnated (relative to GDP), limit overall revenue realization, thus constraining budget execution and the build-up of fiscal buffers. The growth in the public debt stock between the first half of 2017 and the first half of 2018 was mainly attributable to the increased Eurobond issuances, some of which were used to liquidate costlier domestic short-term debt. The Nigeria Economic Recovery and Growth Plan (ERGP) 2017-2020 aims to achieve macroeconomic stability and economic diversification and there is thus the need to accelerate its implementation progress. The special focus topic for this report is on human capital development in Nigeria. Studies show that between 10 and 30 percent of the differences in per capita income between countries can be attributed to human capital. 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