The World Bank has approved a $2.25 billion loan for Nigeria aimed at stabilising the economy following recent reforms and enhancing support for the nation’s poor, the financial institution announced in a statement on Thursday.
In April, Finance Minister Wale Edun revealed Nigeria’s intent to secure up to $2.25 billion in loans from the World Bank, with an expected approval by June. This approval aligns with Nigeria’s bold reform agenda initiated by President Bola Tinubu in May last year. These reforms included the elimination of a popular yet costly petrol subsidy and two significant currency devaluations aimed at jumpstarting economic growth. However, these measures have contributed to rising inflation and exacerbated a cost of living crisis.
The devaluation has led to an International Monetary Fund (IMF) forecast indicating that fuel subsidies could consume up to 3% of Nigeria’s GDP this year, as the surge in pump prices has not kept pace with their dollar cost. Amidst these economic adjustments, labour unions have been exerting pressure on President Tinubu to reverse the reforms.
The World Bank’s loan package consists of a $1.5 billion loan to support Nigeria’s reform efforts and an additional $750 million to accelerate revenue mobilisation. The bank acknowledged Nigeria’s critical reforms designed to address economic distortions and improve the fiscal outlook, noting, “initial critical steps to restore macroeconomic stability, boost revenues, and create the conditions to reignite growth and poverty reduction have been taken.”
This financial support is expected to aid Nigeria in increasing non-oil revenues and promoting fiscal sustainability, crucial steps for delivering quality public services to its citizens. The World Bank emphasized that the loan would bolster Nigeria’s capacity to provide essential services and support economic resilience in the face of ongoing challenges.
Source: Reuters
