In a significant move to bolster Nigeria’s economic stability and growth, the World Bank has disbursed $751.88 million to the country from a recently approved $1.5 billion loan. This disbursement is part of the Nigeria Reforms for Economic Stabilization to Enable Transformation (RESET) Development Policy Financing Program (DPF), aimed at supporting critical economic reforms.
This $1.5 billion loan is divided into two agreements: a $750 million International Development Association (IDA) credit and a $750 million International Bank for Reconstruction and Development (IBRD) loan. The disbursed amount includes the entire $750 million from the IDA credit and an additional $1.88 million from the IBRD loan, leaving an undisbursed balance of $748.13 million.
The RESET project is designed to support significant reforms aligned with the Nigerian government’s priorities for economic stabilization and recovery. The project focuses on four main areas:
1. **Increasing Fiscal Oil Revenues**: Raising fiscal oil revenues from 1.8% of GDP in 2022 to 2.7% by 2025.
2. **Boosting Non-Oil Fiscal Revenues**: Increasing non-oil fiscal revenues from 5.3% of GDP to 7.3% by 2025.
3. **Expanding Social Safety Nets**: Extending social safety nets to assist 67 million vulnerable Nigerians.
4. **Raising Import Value of Previously Banned Products**: Increasing the import value from $11.3 million to $54.6 million by 2025.
The Federal Ministry of Finance is responsible for implementing these reforms, with oversight and collaboration from the World Bank, the Central Bank of Nigeria (CBN), and the Ministry of Humanitarian Affairs and Poverty Alleviation. The World Bank will provide supervision and support throughout the process to ensure the effective achievement of the program’s goals.
To access the full funds, Nigeria must meet specific conditions outlined in the financing agreements. Key actions required include:
– **Presidential Executive Order**: Mandating all fiscal transfers to the Federal Government, including those from crude oil sales and gasoline imports, to be executed at the prevailing market exchange rate.
– **Value-Added Tax (VAT) Reforms**: Submitting a draft bill to the National Assembly to progressively increase the VAT rate to at least 12.5% by 2026 and allowing input tax credits for capital and services.
– **National Social Investment Program Bill**: Submitting a revised bill to the National Assembly mandating the use of the national social registry as the primary targeting tool for social investment programs.
Nigeria has already made progress in several areas, including increasing gasoline prices and initiating cash transfer programs. Continuous monitoring and adherence to the agreed reforms are essential for the continued availability of funds. The World Bank team will closely monitor Nigeria’s compliance with these conditions to ensure the successful implementation of the program.
This financial support from the World Bank is expected to significantly contribute to Nigeria’s economic stability and growth, addressing critical fiscal and social challenges while promoting sustainable development.
