A recent World Bank report has revealed that Nigeria has incurred losses totaling N13 trillion due to foreign exchange (FX) subsidies over the last three years.
The government lost N2 trillion in 2021, N6.2 trillion in 2022, and N5 trillion in 2023 as a result of multiple exchange rates, according to the Bretton Woods institution.
The report emphasized that prior to the full unification of the FX rate in February 2024, Nigeria’s parallel FX market created substantial fiscal costs, including forgone revenues from FX-related inflows such as oil and customs revenues.
This gap significantly reduced the naira-denominated revenue received by the government.
While FX unification has restored fiscal space and addressed market distortions, the report underscored the importance of maintaining this reform, noting that the losses from FX premiums were even larger than those from the PMS subsidy.
