The World Bank has released a $1.5 billion loan to Nigeria in recognition of the Federal Government’s implementation of key economic reforms, including the removal of fuel subsidies and the introduction of progressive tax policies.
The disbursement forms part of a $2.25 billion financing package, which includes the $1.5 billion for the Nigeria Reforms for Economic Stabilization to Enable Transformation (RESET) Development Policy Financing Program (DPF) and $750 million for the Nigeria Accelerating Resource Mobilization Reforms (ARMOR) Program-for-Results (PforR) initiative.
According to the World Bank, this financial package offers immediate support to Nigeria’s efforts to stabilize the economy and provide relief to its most vulnerable populations.
The $1.5 billion RESET DPF loan is divided into two tranches:
- First Tranche: $750 million credit from the International Development Association (IDA) with a 12-year maturity and six-year grace period, disbursed on July 2, 2024.
- Second Tranche: $750 million loan from the International Bank for Reconstruction and Development (IBRD) with a 24-year maturity and an 11-year grace period, disbursed in November 2024 after meeting specified economic reform conditions.
The RESET DPF supports Nigeria in strengthening its economic policy framework, creating fiscal space, and protecting the vulnerable. The ARMOR program focuses on enhancing tax revenue, reforming customs administration, and safeguarding oil revenues.
The World Bank highlighted several key reforms undertaken by Nigeria, including:
- Unification of multiple official exchange rates to foster a market-driven rate.
- Elimination of the regressive and costly petrol subsidy, allowing fuel prices to be market-determined as of October 2024.
- Targeted cash transfer programs to support economically vulnerable households amidst rising inflation.
- Tightened monetary policies by the Central Bank of Nigeria (CBN) to achieve price stability.
These reforms, as outlined in the government’s Letter of Development Policy dated May 3, 2024, aim to restore macroeconomic stability, boost revenue, and lay the foundation for inclusive growth.
The World Bank commended Nigeria for surpassing expectations, particularly in fully deregulating the fuel market ahead of schedule.
Ousmane Diagana, the World Bank Vice President for Western and Central Africa, remarked:
“Nigeria’s determined implementation of far-reaching macro-fiscal reforms marks a turning point that can stabilize its economy and lift millions out of poverty. Sustaining this momentum and expanding protections for the economically at risk are critical.”
Finance Minister and Coordinating Minister of the Economy, Wale Edun, reaffirmed the government’s commitment:
“We have embarked on bold reforms to restore macroeconomic stability and drive sustainable growth. The RESET and ARMOR programs are vital in achieving our development priorities.”
The World Bank emphasized its partnership with Nigeria, supporting the nation’s efforts to reinvigorate its economy, reduce poverty, and create opportunities for all citizens.
