The World Bank has released a $1.5 billion loan to Nigeria following the Federal Government’s implementation of a few of its economic reforms, including removing fuel subsidies and introducing tax policies.
This was announced by the international money lender via a press release on its official website on Sunday.
This came after the bank announced that it had approved two operations:
- $750 million for the Nigeria Accelerating Resource Mobilization Reforms (ARMOR) Program-for-Results (PforR).
- $1.5 billion for the Nigeria Reforms for Economic Stabilization to Enable Transformation (RESET) Development Policy Financing Program (DPF).
According to the document, the loan further supports Nigeria’s ambitious, multi-year plan to increase non-oil revenues and protect oil revenues, encourage fiscal sustainability, and provide enough resources to provide high-quality public services.
These include unifying the multiple official exchange rates and fostering a market-determined official rate, as well as sharply adjusting gasoline prices to begin to phase out the costly, regressive, and opaque gasoline subsidy. The statement buttressed.
Details of the World bank loan
According to the initial press release, the $1.5 billion loan disbursed to Nigeria was structured in two tranches with different maturity periods.
The first tranche, a $750 million credit with a 12-year maturity and a six-year grace period, was provided by The International Development Association.
The second tranche, a $750 million loan from the International Bank for Reconstruction and Development, has a 24-year repayment schedule with an 11-year grace period. The second tranche
The $750 million first tranche was paid out on July 2, 2024, while the second tranche—which was contingent on meeting certain requirements for economic reform—was paid out in November 2024.
The World Bank commended the government for not only meeting the condition but exceeding expectations by fully deregulating the fuel market, and the price of PMS has been determined by the international market and the exchange rate set by the Central Bank of Nigeria.
“The borrower has satisfied the conditions for the release of the second tranche, consisting of the US$750 million loan, as outlined in the loan agreement and described below.
“The three-tranche release conditions for the second tranche have been satisfactorily completed. The macroeconomic framework continues to be adequate for this operation.
“Despite considerable pressures on the economy and households, the authorities are staying the course with challenging measures to restore macroeconomic stability and create the foundations for sustained and inclusive growth.” the bank said.
Wale Edun, Nigeria’s Minister of Finance and Coordinating Minister of the Economy while commenting on the loan said that:
“We have embarked on bold and necessary reforms to restore macroeconomic stability and put the country back on a sustainable and inclusive economic growth path that will create quality jobs and economic opportunities for all Nigerians“.
Ousmane Diagana, the World Bank Vice President for Western and Central Africa, said the financing package reinforces the World Bank’s support towards reinvigorating its economy and fast-tracking poverty reduction, which can serve as a beacon for Africa.
