World Bank disburses $1.5bn loan to Nigeria
The World Bank has approved a $1.5 billion loan to Nigeria, aimed at supporting economic reforms, including fuel subsidy removal and tax restructuring.
The loan, part of the Reforms for Economic Stabilisation to Enable Transformation Development Policy Financing initiative, was approved on June 13, 2024.
The first tranche of $750 million was disbursed in July 2024, while the second tranche followed in November after meeting specified reform conditions.
Structured in two tranches, the loan includes a $750 million credit from the International Development Association with a 12-year maturity and six-year grace period and a $750 million loan from the International Bank for Reconstruction and Development with a 24-year repayment period and 11-year grace period.
According to the World Bank, the disbursements were tied to Nigeria’s implementation of key reforms, such as fuel subsidy removal, exchange rate harmonization, and tax policies. These reforms were part of a broader strategy to stabilise and transform the economy.
In October 2024, the Federal Government submitted a tax reform bill to the National Assembly, triggering debates over its implications and opposition from Northern leaders.
The World Bank document highlighted significant progress:
“The borrower has prepared and submitted to the National Assembly on October 3, 2024, a comprehensive package of tax reforms, which not only reform the VAT regime but also simplify tax policy laws and tax administration.”
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Further reforms include full deregulation of the fuel market, allowing retail prices to align with market conditions, and transitioning from deficit monetisation to standard debt instruments for deficit financing.
The initiative is part of Nigeria’s commitment to economic stability and sustainable growth through international financial measures.
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