The World Bank may approve loans to Nigeria totaling $2.25 billion across two major projects on June 13, 2024.
According to official documents obtained by Nairametrics, the funds will be distributed between two projects aimed at enhancing Nigeria’s economic stability and resource mobilization capabilities.
The first project, the Nigeria Reforms for Economic Stabilization to Enable Transformation (RESET) Development Policy Financing (DPF), is set to receive $1.5 billion.
The second project, NG Accelerating Resource Mobilization Reforms (ARMOR) Program-for-Results (PforR), has proposed funding of $750 million.
Discussions are currently underway between the World Bank and Nigerian authorities to finalize the terms of these loans. These negotiations are critical as they shape the financial and operational frameworks that will govern the implementation of the projects.
The funds are expected to bolster Nigeria’s efforts in reforming economic policies and enhancing government resource mobilization, essential for the country’s long-term financial sustainability and economic resilience.
About the ARMOR project
- The principal Program Development Objective (PDO) of the PforR program is to enhance non-oil revenues and protect oil and gas revenues from 2024 to 2028 at the federal level, focusing on significant tax, excise, and administrative reforms.
- The program includes three main result areas: implementing tax and excise reforms to increase VAT collections and excise rates on health and environmentally friendly products, strengthening tax and customs administrations to enhance VAT compliance and effectiveness of audits, and safeguarding oil and gas revenues by increasing transparency and net revenue contributions.
- The PforR program includes technical assistance focused on supporting the Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service (NCS) to enhance taxpayer and trader compliance.
About the RESET project
- The proposed DPF for Nigeria consists of a standalone operation with two tranches designed to support significant reforms in alignment with the government’s economic stabilization and recovery priorities.
- This operation is structured around four key results distributed across two pillars: increasing fiscal oil revenues from 1.8% of Gross Domestic Product (GDP) in 2022 to 2.7% by 2025, boosting non-oil fiscal revenues from 5.3% to 7.3% over the same period, expanding social safety nets to assist 67 million vulnerable Nigerians, and raising the import value of previously banned products from $11.3 million to $54.6 million by 2025.
- The Federal Ministry of Finance (MOF) is tasked with the implementation of these reforms, working under the oversight of the World Bank, which collaborates with other key national stakeholders such as the Central Bank of Nigeria (CBN) and the Ministry of Humanitarian Affairs and Poverty Alleviation (MHAPA) to monitor and assess the progress and impact of these reforms.
- The World Bank will provide supervision and support throughout the implementation process, ensuring that the operation’s goals are met efficiently and effectively.
More Insights
- During the press briefing at the end of Nigeria’s activities at the World Bank/IMF Spring Meetings in Washington DC, the United States, the Minister of Finance, Wale Edun, had said that the Federal Government was looking forward to receiving around $2.2 billion single-digit interest loan from the World bank and another budget support facility from the African Development Bank (AfDB).
- Nairametrics earlier reported that Nigeria might reinstate a previously suspended telecom tax and other fiscal measures as it seeks to secure a new $750 million loan from the World Bank.
