• Saturday, July 13, 2024
businessday logo

BusinessDay

World Bank approves $2.25 billion loan to back Tinubu’s reforms

World Bank to oversee underperforming $500m Nigeria electricity loan

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.

Read also: Nigeria’s $2.25bn World Bank loan expected June

“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 stabilize 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.

The funding will be received via two major development projects. The first project is the Nigeria Reforms for Economic Stabilization to Enable Transformation (RESET) Development Policy Financing, which is set to receive $1.5bn.

The second project, NG Accelerating Resource Mobilization Reforms Programme-for-Results (ARMOR), has a proposed funding of $750m.

The World Bank said 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,” 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.”