The World Bank has approved a $1.5 billion loan to Nigeria, marking a significant milestone after the Nigerian government implemented key economic reforms, including the removal of fuel subsidies and the introduction of new tax policies.
The loan is part of a broader $2.25 billion package aimed at supporting Nigeria’s efforts to stabilize its economy and reduce poverty.
In a statement released on June 13, 2024, the World Bank confirmed the approval of two major operations: 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).
These funds are designed to provide both immediate financial support and technical assistance to the country’s ongoing economic transformation.
The RESET DPF program focuses on creating fiscal space, safeguarding oil revenues, and promoting fiscal sustainability, while the ARMOR PforR program supports efforts to strengthen tax revenue and customs administrations.
The loan package, disbursed in two tranches, is intended to address Nigeria’s fragile economic situation, which has been further strained by the global inflation crisis and fluctuating oil prices.
The first tranche of $750 million was disbursed on July 2, 2024, and was provided by the International Development Association (IDA), featuring a 12-year maturity with a six-year grace period.
The second tranche, also valued at $750 million, came from the International Bank for Reconstruction and Development (IBRD) and was released in November 2024 after Nigeria met the necessary economic reform conditions.
This tranche carries a 24-year repayment period with an 11-year grace period.
The World Bank commended Nigeria for its swift implementation of these reforms, especially in deregulating the fuel market.
The government’s decision to move immediately to market-determined prices for gasoline, effective October 2024, was considered a significant overachievement of the agreed conditions for the loan release.
Finance Minister Wale Edun expressed the government’s commitment to restoring macroeconomic stability and fostering inclusive growth.
He welcomed the support from the RESET and ARMOR programs, emphasizing that the reforms will help create sustainable economic opportunities for Nigerians.
Ousmane Diagana, World Bank Vice President for Western and Central Africa, highlighted that Nigeria’s reform efforts position it on a path to economic stabilization and poverty reduction.
He stressed the importance of sustaining these reforms to protect vulnerable households from the impacts of high inflation and cost-of-living pressures.
This $2.25 billion financial package underscores the World Bank’s continued partnership with Nigeria and its support for the country’s economic revitalization.