The World Bank has disbursed $751.88 million to Nigeria from a recently approved loan of $1.5 billion, Nairametrics reports.
According to findings, the amount was disbursed under the Nigeria Reforms for Economic Stabilization to Enable Transformation (RESET), Development Policy Financing Program (DPF) project.
This loan project is a part of the broader $2.25 billion approved by the World Bank for Nigeria on June 13, 2024, to boost reforms in the country.
The $1.5 billion loan comprises two separate agreements between Nigeria and the World Bank: An International Development Association (IDA) credit of $750 million and an International Bank for Reconstruction and Development (IBRD) loan of $750 million.
The amount disbursed includes the entire $750 million from the IDA loan and $1.88 million from the IBRD of the World Bank, with an undisbursed balance of $748.13 million.
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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.
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The World Bank will provide supervision and support throughout the implementation process, ensuring that the operation’s goals are met efficiently and effectively.
What you should know
According to the financing agreement documents for the loan, Nigeria is expected to meet certain conditions to get the entire funds.
Both IDA Credit and IBRD loan agreements have the same requirements, according to the loan agreement documents obtained from the World Bank.
The actions to be undertaken under this loan project include the following:
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- Presidential Executive Order: A mandate for 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 within a specified implementation period.
- Value-Added Tax (VAT) Reforms: Submission of a draft bill to the National Assembly to progressively increase the VAT rate to at least 12.5% by 2026 and allow input tax credits for capital and services.
- National Social Investment Program Bill: Submission of a revised bill to the National Assembly mandating the use of the national social registry as the primary targeting tool for social investment programs.
So far, Nigeria has made progress in some areas, such as increasing gasoline prices and beginning the implementation of cash transfer programs.
However, continuous monitoring and adherence to the agreed reforms will be done to ensure the continued availability of funds.
The World Bank team is expected to closely monitor Nigeria’s compliance with these conditions.
