The World Bank has disbursed a $1.5bn loan to Nigeria following the Federal Government’s implementation of key economic reforms, including the removal of fuel subsidies and comprehensive tax policies.
The loan, approved on June 13, 2024, under the Reforms for Economic Stabilisation to Enable Transformation Development Policy Financing (RESET DPF) initiative, was disbursed in two tranches.
The first $750m tranche was released on July 2, 2024, while the second tranche followed in November after meeting stipulated reform conditions.
Among the reforms, the removal of fuel subsidies stood out.
By October 2024, petrol prices were fully deregulated, aligning with international market rates, effectively ending implicit subsidies.
This move caused fuel prices to surge fivefold but was praised for fiscal prudence.
Additionally, the Federal Government introduced tax reforms for boosting non-oil revenue.
A draft bill proposing an increase in the VAT rate to 10% by 2025 and measures to simplify tax compliance was submitted to the National Assembly.
Despite the public’s outburst over the reforms, citing soaring living costs, President Bola Tinubu defended the measures, stating the savings would be redirected to infrastructure development and social welfare programs.
To cushion the effects, the government initiated cash transfers of ₦25,000 to vulnerable households, though only 4 million out of a targeted 15 million households have benefited.
Efforts to promote compressed natural gas as a cheaper fuel alternative are also underway.
The World Bank commended Nigeria’s swift reforms, describing them as vital for economic transformation and revenue diversification.
Despite these achievements, concerns persist over rising debt.
Nigeria’s external debt to the World Bank now totals $16.32bn, representing 38% of the country’s foreign liabilities.
