The World Bank has disbursed a $1.5 billion loan to Nigeria to support the country’s economic reforms, including fuel subsidy removal and tax system changes, according to a report released Sunday, December 29.
The report stated that the loan facility was in support of some of the reforms initiated by the Bola Tinubu administration, which included 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 loan is part of the World Bank’s Reforms for Economic Stabilisation to Enable Transformation (RESET) Development Policy Financing initiative, which was approved in June 2024. Together with a separate $750 million Accelerating Resource Mobilisation Reforms (ARMOR) Program-for-Results for Nigeria, the total financing package reaches $2.25 billion.
The funds were released in two equal instalments of $750 million each. The first tranche, disbursed on July 2, 2024, comes from the International Development Association with a 12-year maturity and six-year grace period. The second tranche, released in November 2024, is provided by the International Bank for Reconstruction and Development with a 24-year repayment period and an 11-year grace period.
According to the World Bank report, the financing aims to help stabilise Nigeria’s economy while supporting vulnerable populations. The funds will also support efforts to increase non-oil revenues and ensure sufficient resources for public services.
The second tranche was released after Nigeria met specific economic reform conditions. The World Bank further noted that Nigeria had “recognised the urgency of changing course and embarked on critical reforms to address economic distortions and strengthen the fiscal outlook.”
Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Wale Edun, welcomed the World Bank’s support through the RESET and ARMOR programmes. “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,” Edun said.
The Finance Minister stated that these reforms aim to create quality jobs and economic opportunities for all Nigerians. He noted that the World Bank’s support would help the government implement its macro-fiscal and social protection policies while accelerating investment and redirecting public resources toward development priorities.
This financing package represents one of the World Bank’s largest recent commitments to support economic reforms in Africa’s most populous nation.
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