The Washington-based World Bank has disbursed a $1.5 billion foreign loan to Nigeria as part of the federal government’s effort to implement fuel subsidy removal and tax reforms
This is according to the World Bank’s recent document on the progress of the loan.
It was gathered that the loan had been spearheaded as part of the Reforms for Economic Stabilisation to Enable Transformation Development Policy Financing initiative in six months.
The document showed that the loan was approved on June 13, 2024, with the first tranche of $750m disbursed on July 2, 2024, while the latest disbursement was done in November.
Accordingly, the second tranche disbursement was tied to the fulfilment of specific economic reform conditions and was disbursed in November 2024.
Consequently, this brought the total disbursement from the World Bank to Nigeria to about $1.88 million, representing less than one percent of the total approved $750 million for the ARMOUR project.
Further details indicated that the $1.5 billion loan disbursed to Nigeria was structured in two tranches with different maturity periods.
The first tranche was a $750 million credit from the International Development Association, featuring a 12-year maturity and a six-year grace period.
The second tranche, a $750 million loan from the International Bank for Reconstruction and Development, has a 24-year repayment period with an 11-year grace period.
According to the World Bank, Nigeria surpassed conditions for the loan approval with the implementation of sweeping reforms such as subsidy removal, exchange rate harmonisation, and tax policies.
Recall that in October 2024, the Federal Government submitted a tax reform bill to the National Assembly for passage, which had generated months-long controversies over its impact and opposition by Northern Nigerian leaders.
According to the World Bank document, “The borrower has prepared and submitted to the National Assembly on October 3, 2024, a comprehensive package of tax reforms, which not only reform the VAT regime but also simplify tax policy laws and tax administration.
