Recent information indicates that the administration has nearly secured the loan.
Nkiruka Aduba
The World Bank is set to provide the Federal Government with new loan funding totaling $2.25 billion, with approval expected on June 13, 2024. This funding will support two major development projects: the Nigeria Reforms for Economic Stabilization to Enable Transformation Development Policy Financing, which will receive $1.5 billion, and the NG Accelerating Resource Mobilization Reforms Programme-for-Results, with proposed funding of $750 million.
A document posted on the World Bank website suggests that the government may reintroduce taxes on telecom services and electronic money transfers through the Nigerian Banking System, among other measures.
Recent information indicates that the administration has nearly secured the loan. Minister of Finance, Wale Edun, announced at the spring meetings of the International Monetary Fund and the World Bank last month that the nation qualified for processing a loan of $2.25 billion from the World Bank, described as ‘virtually a grant,’ at a one percent interest rate.
This package, approved by the World Bank’s Board of Directors, offers a 40-year term with a 10-year moratorium and a nominal one percent 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.”
As per the programme information documents on the international lender’s website, the two projects aim to improve Nigeria’s economic stability and its ability to mobilize resources.
The funds are expected to strengthen Nigeria’s efforts in reforming economic policies and enhancing government resource mobilization, crucial for the country’s long-term financial sustainability and economic resilience.
According to the document, the primary goal of the Programme-for-Results (PforR) program is to boost non-oil revenues and safeguard oil and gas revenues from 2024 to 2028 at the federal level. This emphasizes significant tax, excise, and administrative reforms.
The programme focuses on three main areas of results: implementing tax and excise reforms to increase VAT collections and excise rates on health and environmentally friendly products, strengthening tax and customs administrations to improve VAT compliance and audit effectiveness, and safeguarding oil and gas revenues by enhancing transparency and net revenue contributions.
The PforR programme provides technical assistance to support the Federal Inland Revenue Service and the Nigeria Customs Service in improving 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.
Additionally, the proposed Development Policy Financing (DPF) for Nigeria comprises a standalone operation with two tranches aimed at supporting substantial reforms aligned with the government’s priorities for economic stabilization and recovery.
This operation is organized around four key outcomes spread across two pillars: increasing fiscal oil revenues from 1.8 percent of Gross Domestic Product in 2022 to 2.7 percent by 2025, enhancing non-oil fiscal revenues from 5.3 percent to 7.3 percent 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.
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