The World Bank has approved a total of $2.25 billion loan for Nigeria to help stabilise its economy in the light of the ongoing reforms as well as scale up support for the poor, it said in a statement on Thursday.
In April, Finance Minister Wale Edun said Nigeria was seeking up to $2.25 billion in World Bank loans and expects the bank’s board to approve the request in June.
The World Bank said it approved a $1.5 billion loan to back Nigeria’s reforms and another $750 million to accelerate revenue mobilisation.
It added that Nigeria has embarked on critical reforms to address economic distortions and strengthen its fiscal outlook, saying that the country has taken “initial critical steps to restore macroeconomic stability, boost revenues, and create the conditions to reignite growth and poverty reduction have been taken.”
The loan will support Nigeria’s effort to raise non-oil revenues and promote fiscal sustainability, which will help the West African nation deliver quality public services, the World Bank said.
Recall that President Bola Tinubu last year in May initiated the various reforms in the country which included scrapping of costly petrol subsidy and devaluation the naira twice to try to kick-start growth.
But the moves have fuelled inflation to jump significantly and worsened a cost of living crisis.
With the devaluation, the International Monetary Fund forecast that fuel subsidies could cost up to 3% of GDP this year as the increases in pump prices have not kept up with their dollar cost.
Commenting, Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said: “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.”
Also commenting, Ousmane Diagana, the World Bank Vice President for Western and Central Africa, said: “We welcome the support of the RESET and ARMOR programs as we further consolidate and implement our macro-fiscal and social protection policy reforms, consistent with accelerating investment and redirecting public resources sustainably to achieve development priorities.
“Nigeria’s concerted efforts to implement far-reaching macro-fiscal reforms place it on a new path which can stabilize its economy and lift its people out of poverty.
“It is critical to sustain the reform momentum and continue to scale up and expand protection to the poor and economically at risk to cushion the effects of cost-of-living pressures on citizens
“This financing package reinforces the World Bank’s strong partnership with Nigeria, and our support towards reinvigorating its economy and fast-tracking poverty reduction, which can serve as a beacon for Africa.
“The RESET DPF is focused on supporting Nigeria strengthen its economic policy framework by creating fiscal space and protecting the poor and economically insecure.
“The ARMOR PforR will support efforts to implement tax and excise reforms, strengthen tax revenue and customs administrations, and safeguard oil revenues,” the World Bank said.
