Government of Ghana is said to have reached an agreement with banks to restructure USD1.4bn of locally issued USD bonds

Nigeria: Yesterday, the World Bank published its bi-annual Development Update for Nigeria, titled ‘Seizing the opportunity’.

 The Bank noted that removal of the petrol subsidy and foreign exchange management reforms are crucial measures to begin to rebuild fiscal space and restore macroeconomic stability, and that the opportunity should be seized to take further necessary policy reform steps. Removal of the petrol subsidy is projected to generate about NGN2tn (0.9% of GDP) in fiscal savings in 2023, reaching over NGN11tn by the end of 2025, while harmonisation of the FX windows is expected to improve the efficiency of the FX market and unlock private investment.

Removal of the petrol subsidy is anticipated to temporarily increase inflation to 25% in 2023 from 18.8% in 2022, before contributing to disinflation over the medium term. The report also notes that compensating transfers to vulnerable households will be essential in order to shield them from the adverse impact of higher petrol prices. In term of the Bank’s broader economic assessment of Nigeria, GDP is forecast to grow by 3.3% in 2023, same as 2022, thereafter rising to 3.7% in 2024 and 4.1% in 2025 supported by increases in the manufacturing and services sectors and slow recovery in the oil sector.

The fiscal deficit is expected to remain large, at about 5.1% of GDP in 2023, before falling to 4.0% in 2024 and 3.9% in 2025. Meanwhile, the debt-to-GDP ratio is anticipated to rise from 40% in 2022 to 46% in 2023, before receding slightly to 45% in 2025. In the absence of reforms, the World Bank estimates the debt ratio could have risen to 49% by 2025.