$2.25b World Bank Loan Offers Hope for Economic Recovery
The Federal Government of Nigeria has secured $2.25 billion in funding from the World Bank, comprising two key financial operations aimed at economic stabilisation and support for vulnerable populations.
Key details of the facility include a 40-year term with a 10-year moratorium with a nominal interest rate of one per cent. This initiative is part of a broader effort to support Nigeria’s fiscal sustainability and economic resilience.
Analysts at Commercio Partners said, the package includes $1.5 billion Nigeria Reforms for Economic Stabilisation to Enable Transformation Development Policy Financing Program (RESET)and $750 million Nigeria Accelerating Resource Mobilisation Reforms Program-for-Results (ARMOR).
Analyst at Commercio Partners, Ifeanyi Uba, explained that this funding is intended to provide immediate financial and technical support for Nigeria’s urgent economic stabilisation efforts, enhance non-oil revenue generation, and safeguard oil revenues to promote fiscal sustainability and improve public service delivery.
The approval, announced by the World Bank on June 13, 2024, follows recent discussions at the International Monetary Fund and World Bank Spring meetings, where Finance Minister Wale Edun highlighted the nation’s qualification for this significant funding support.
This combined $2.25 billion package provides immediate financial and technical support to Nigeria’s urgent efforts to stabilise the economy and scale up support to the poor and most economically at risk. It further supports Nigeria’s ambitious, multi-year effort to raise non-oil revenues and safeguard oil revenues to promote fiscal sustainability and provide sufficient resources to deliver 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. 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.
“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,” Edun 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 stabilise 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,” the World Bank Vice President for Western and Central Africa, Ousmane Diagana, said.
“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.”
SOURCE: The Nation
