The World Bank has disbursed a $1.5 billion loan to Nigeria, supporting the federal government’s initiatives to remove fuel subsidies and implement tax reforms under the Reforms for Economic Stabilisation to Enable Transformation Development Policy Financing initiative.
The loan, approved on June 13, 2024, was disbursed in two tranches: a $750 million credit from the International Development Association with a 12-year maturity and six-year grace period, and a $750 million loan from the International Bank for Reconstruction and Development with a 24-year repayment period and an 11-year grace period. The first tranche was released in July 2024, while the second tranche was disbursed in November following the fulfillment of economic reform conditions.
The World Bank noted that Nigeria exceeded requirements for loan approval, citing measures such as fuel subsidy removal, exchange rate harmonization, and tax policy reforms. A tax reform bill, submitted to the National Assembly in October 2024, has faced opposition but is central to the government’s economic restructuring agenda.
“Reforms have also been implemented to fully deregulate the fuel market, ensuring that retail prices are determined by market conditions and opening the sector to competition,” the World Bank document stated.
However, these policies have drawn mixed reactions. While praised for addressing fiscal deficits, the reforms have significantly increased fuel prices and exchange rates, driving headline inflation to 34.60% and food inflation to 39.93%. Despite government interventions such as N25,000 disbursements to households and the Compressed Natural Gas Initiative, many Nigerians continue to face heightened living costs.
The government’s efforts to stabilize the economy amid these reforms remain a subject of debate, with growing calls for more effective measures to mitigate the impact on citizens.
