The World Bank has released a $1.5 billion loan to Nigeria, commending the Federal Government’s economic reforms, including the removal of fuel subsidies and the introduction of tax policies. This release is part of a broader $2.25 billion package, which includes two operations: $1.5 billion under the Nigeria Reforms for Economic Stabilization to Enable Transformation Development Policy Financing Program and $750 million for the Nigeria Accelerating Resource Mobilization Reforms Program-for-Results.
The package aims to stabilize Nigeria’s economy, improve fiscal sustainability, and protect vulnerable populations. According to a World Bank document dated June 13, 2024, these efforts will also help boost non-oil revenues and safeguard public resources to deliver quality services.
The $1.5 billion loan is divided into two tranches. The first tranche, a $750 million credit from the International Development Association, has a 12-year maturity and a six-year grace period and was disbursed on July 2, 2024. The second tranche, a $750 million loan from the International Bank for Reconstruction and Development, has a 24-year maturity and an 11-year grace period and was disbursed in November 2024 upon fulfilling specific economic reform conditions.
The RESET DPF supports fiscal policy improvements and protection for vulnerable groups, while the ARMOR PforR focuses on tax and excise reforms, strengthening customs administration, and safeguarding oil revenues.
The World Bank highlighted Nigeria’s progress in implementing critical reforms, including unifying multiple exchange rates to adopt a market-determined official rate, phasing out fuel subsidies, strengthening monetary policy by raising interest rates to combat inflation, and launching targeted cash transfer programs to mitigate the effects of inflation on the poor. Despite economic challenges, the government exceeded expectations by fully deregulating the fuel market ahead of schedule, allowing fuel prices to align with international market rates as of October 2024.
Nigeria’s Minister of Finance, Wale Edun, emphasized the government’s commitment to macroeconomic stability and inclusive growth, stating, “We have embarked on bold reforms to restore stability and create economic opportunities for all Nigerians. We welcome the support of the RESET and ARMOR programs to achieve our development priorities.”
World Bank Vice President for Western and Central Africa, Ousmane Diagana, commended Nigeria’s progress, adding, “These reforms set Nigeria on a path to stabilize its economy and reduce poverty. Sustaining this momentum is crucial to expanding support for vulnerable populations and addressing cost-of-living pressures.”
The World Bank reaffirmed its partnership with Nigeria, emphasizing the importance of continued reform to strengthen the economy and improve living standards.
