The Nigerian government has gotten approval of a fresh $2.25bn loan request from the World Bank.
Wale Edun, Nigeria’s minister of finance and coordinating minister of the economy announced Thursday night the approval of two major financial support packages by the World Bank.
The loans are part of President Tinubu’s ongoing efforts to stabilise the economy, reposition it for sustained and inclusive growth, and provide urgent support to the poor and vulnerable, the minister said.
“We have undertaken bold and necessary reforms to restore macroeconomic stability and put Nigeria on a path to sustainable and inclusive economic growth. We welcome the support of the RESET and ARMOR programs as we further consolidate and implement our policy reforms, consistent with accelerating investment and using public resources more sustainably to achieve our development goals,” Edun said in a statement released by the ministry of finance today.
The Minister of Finance had announced intentions to get the loan at the spring meetings of the International Monetary Fund and the World Bank in April.
Ousmane Diagana, the World Bank Vice President for Western and Central Africa said Nigeria’s comprehensive macro-fiscal reforms are placing the country on a new path that can stabilise the economy and lift people out of poverty.
“It is essential to maintain the momentum of these reforms and continue to provide support to the poor and vulnerable to mitigate the impact of the cost-of-living crisis. This financing package strengthens the World Bank’s strong partnership with Nigeria and supports efforts to rejuvenate the economy and expedite poverty reduction, serving as an example for Africa,” Diagana said in the statement released by the ministry of finance.
Two significant development projects will receive funding. The first, the Nigeria Reforms for Economic Stabilisation to Enable Transformation (RESET) Development Policy Financing, is slated to obtain $1.5 billion.
The second project, NG Accelerating Resource Mobilisation Reforms Programme-for-Results (ARMOR), is proposed to receive $750 million. The World Bank expressed its backing for Nigeria’s extensive endeavor to enhance non-oil revenues and protect oil revenues, aiming to bolster fiscal sustainability and ensure ample resources for delivering high-quality public services.
“Confronted with a fragile economic situation, Nigeria recognised the urgency of changing course and embarked on critical reforms to address economic distortions and strengthen the fiscal outlook,” the Brenton Wood institution said in a statement about the loan on its website.
“Initial critical steps to restore macroeconomic stability, boost revenues, and create the conditions to reignite growth and poverty reduction have been taken. 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 Central Bank of Nigeria (CBN) has refocused on its core mandate of price stability and is tightening monetary policy including by increasing interest rates, as is appropriate to reduce inflation.
“A targeted cash transfer program is being rolled out to cushion the impact of high inflation on the poor and economically insecure households.”
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