July 14, 2024

World Bank approves $2.25bn loan as Nigeria’s debt profile rises

The World Bank has approved a $2.25 billion loan facility for Nigeria to back President Bola Ahmed Tinubu’s economic reforms despite the rising debt profile in the country.

Wale Edun, Minister of Finance disclosed this in a statement on Thursday.

Edun said the loan is to fund two critical economy projects, Nigeria Reforms for Economic Stabilization to Enable Transformation (RESET) and NG Accelerating Resource Mobilization Reforms Programme-for-Results (ARMOR) with a proposed funding of $1.5 billion and $750 million respectively.

He noted that the loans are part of President Tinubu’s ongoing efforts to stabilize the economy, reposition it for sustained and inclusive growth, and provide urgent support to the poor and vulnerable.

“We have undertaken bold and necessary reforms to restore macroeconomic stability and put Nigeria on a path to sustainable and inclusive economic growth. We welcome the support of the RESET and ARMOR programs as we further consolidate and implement our policy reforms, consistent with accelerating investment and using public resources more sustainably to achieve our development goals,” Edun said in a statement released by the Ministry of Finance Thursday.

According to the statement, Ousmane Diagana, the World Bank Vice President for Western and Central Africa said Nigeria’s comprehensive macro-fiscal reforms are placing the country on a new path that can stabilize the economy and lift people out of poverty.

“It is essential to maintain the momentum of these reforms and continue to provide support to the poor and vulnerable to mitigate the impact of the cost-of-living crisis. This financing package strengthens the World Bank’s strong partnership with Nigeria and supports efforts to rejuvenate the economy and expedite poverty reduction, serving as an example for Africa.”

Recall that the Minister of Finance, Edun announced intentions to get the loan at the spring meetings of the International Monetary Fund and the World Bank in April.

The development comes as the total debt stock of Nigeria at the end of 2023 stood at N97.341 trillion, according to the Debt Management Office.

In Nigeria’s debt figure, foreign debt stood at which stood at N38.22 trillion, accounting for 39 percent of the total debt stocks as of the end of 2023.

Tinubu’s twin reform of fuel subsidy removal and Naira floating left Nigerians with the ripple effect of economic hardship.

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