Federal Government Set to Secure $2.25 Billion World Bank Loan for Economic Reforms
The Federal Government is on the verge of securing fresh loan funding from the World Bank, with an anticipated approval date set for June 13, 2024. The loans, totaling $2.25 billion, will be allocated to two significant development projects aimed at bolstering Nigeria’s economic stability and resource mobilization capabilities.
The first project, titled Nigeria Reforms for Economic Stabilization to Enable Transformation Development Policy Financing, is slated to receive $1.5 billion. The second project, NG Accelerating Resource Mobilization Reforms Programme-for-Results, is earmarked for $750 million in funding.
Previous reports had hinted at the possibility of reintroducing suspended telecom taxes and other fiscal measures to secure the $750 million loan.
A document outlining the plan, available on the World Bank’s website, suggests that the government may indeed reintroduce excises on telecom services and EMT levies on electronic money transfers through the Nigerian Banking System, among other taxes.
However, recent updates indicate that the administration may have made significant progress in securing the loan. During the spring meetings of the International Monetary Fund and the World Bank last month, Minister of Finance, Wale Edun, announced that Nigeria had qualified for a loan amounting to $2.25 billion from the World Bank, described as ‘virtually a grant,’ with an interest rate of one percent.
The approved package, endorsed by the World Bank’s Board of Directors, offers favorable terms, including a 40-year term, a 10-year moratorium, and a nominal one percent interest rate.
According to program information documents posted on the World Bank’s website, the two projects aim to enhance Nigeria’s economic stability and resource mobilization capabilities. These funds are expected to support economic policy reforms and government resource mobilization efforts, critical for Nigeria’s long-term financial sustainability and economic resilience.
The projects are structured around specific result areas, including implementing tax and excise reforms, strengthening tax and customs administrations, and safeguarding oil and gas revenues. Additionally, technical assistance will be provided to enhance taxpayer and trader compliance.
The overarching objectives of these projects include increasing fiscal oil revenues, boosting non-oil fiscal revenues, expanding social safety nets, and raising the import value of previously banned products, all aimed at fostering economic growth and development in Nigeria.
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