Economy

Tinubu’s government to receive fresh N3.35trn ($2.25bn) loan from World Bank

Published

7 months ago

May 12, 2024

The government of President Bola Ahmed Tinubu is set to receive fresh loan funding from the World Bank, with approval expected for loans totalling $2.25bn (N3.35trn) at the exchange rate of N1488.7/$) on June 13, 2024.

Recalls that the Minister of Finance, Wale Edun, at the spring meetings of the International Monetary Fund and the World Bank last month, had announced that the nation had qualified for processing a loan, described as ‘virtually a grant’ of $2.25bn from the World Bank at one per cent interest rate.

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

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

According to the Minister the package, approved by the Board of Directors of the World Bank, offers a 40-year term with a 10-year moratorium and a nominal one per cent interest rate.

He stated, “We have qualified for the processing just this week to the Board of Directors of the World Bank of a total package of $2.25bn of what you can call ‘the closest you can get to a free lunch’- virtually a grant. It’s for about 10- 20 years moratorium and about one per cent interest.”

According to programme information documents posted on the international lender website, the two projects aim to enhance Nigeria’s economic stability and resource mobilisation capabilities.

It is expected that the funds will bolster Nigeria’s efforts in reforming economic policies and enhancing government resource mobilisation, essential for the country’s long-term financial sustainability and economic resilience.

The document stated that the primary aim of the PforR programme is to boost non-oil revenues and safeguard oil and gas revenues from 2024 to 2028 at the federal level, emphasising substantial tax, excise, and administrative reforms.

The programme 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 programme includes technical assistance, supporting the Federal Inland Revenue Service and the Nigeria Customs Service to enhance taxpayer and trader compliance.

“The principal programme development objective is to raise non-oil revenues and safeguard oil and gas revenues. This result area aims to increase the transparency of NNPCL’s financial and operational performance through audits and regular production of enhanced reports submitted to FAAC, including all relevant information; and increase net oil and gas revenues transferred to the Federation,” the report read.

Also, 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 per cent of Gross Domestic Product in 2022 to 2.7 per cent by 2025, boosting non-oil fiscal revenues from 5.3 per cent to 7.3 per cent over the same period, expanding social safety nets to assist 67 million vulnerable Nigerians, and raising the import value of previously banned products from $11.3m to $54.6mby 2025.