The World Bank has approved two financing facilities totaling $2.25 billion to aid Nigeria’s Federal Government in revitalizing and stabilizing its struggling economy.
In a statement titled “Supporting Nigeria’s Homegrown Reforms: New World Bank Financing for Inclusive Growth and Revenue Diversification,” the World Bank gave details about the funding’s allocation.
The approval includes $1.5 billion for the Nigeria Reforms for Economic Stabilization to Enable Transformation (RESET) Development Policy Financing Program and $750 million for the Nigeria Accelerating Resource Mobilization Reforms (ARMOR) Program-for-Results.
“This combined $2.25 billion package provides immediate financial and technical support to Nigeria’s urgent efforts to stabilize the economy and scale up support to the poor and most economically at risk. It further supports Nigeria’s ambitious, multi-year effort to raise non-oil revenues and safeguard oil revenues to promote fiscal sustainability and provide sufficient resources to deliver quality public services,” the statement read.
Facing a fragile economic situation, Nigeria has embarked on critical reforms to address economic distortions and strengthen the fiscal outlook.
Initial steps include unifying multiple official exchange rates, fostering a market-determined official rate, and adjusting gasoline prices to phase out the costly and opaque gasoline subsidy.
“The Central Bank of Nigeria (CBN) has refocused on its core mandate of price stability and is tightening monetary policy, including by increasing interest rates, as is appropriate to reduce inflation. A targeted cash transfer program is being rolled out to cushion the impact of high inflation on the poor and economically insecure households,” the statement continued.
Minister of Finance and Coordinating Minister of the Economy, Wale Edun, commented on the reforms.
“We have embarked on bold and necessary reforms to restore macroeconomic stability and put the country back on a sustainable and inclusive economic growth path that will create quality jobs and economic opportunities for all Nigerians,” he said.
Ousmane Diagana, the World Bank Vice President for Western and Central Africa, also expressed support.
“We welcome the support of the RESET and ARMOR programs as we further consolidate and implement our macro-fiscal and social protection policy reforms, consistent with accelerating investment and redirecting public resources sustainably to achieve development priorities. Nigeria’s concerted efforts to implement far-reaching macro-fiscal reforms place it on a new path which can stabilize its economy and lift its people out of poverty.”
He highlighted the importance of sustaining reform momentum and expanding protection for the poor and economically at-risk populations to mitigate cost-of-living pressures.
“This financing package reinforces the World Bank’s strong partnership with Nigeria, and our support towards reinvigorating its economy and fast-tracking poverty reduction, which can serve as a beacon for Africa.”
The RESET DPF aims to strengthen Nigeria’s economic policy framework by creating fiscal space and protecting the poor and economically insecure, while the ARMOR PforR will support tax and excise reforms, enhance tax revenue and customs administrations, and safeguard oil revenues.
