Nigeria gets fresh $2.25 billion World Bank funding

The World Bank has approved a $2.25 billion financial support package for Nigeria, providing a boost to the country’s economic reforms.

The funds will support Nigeria’s efforts to stabilize the economy and assist the poor, the World Bank said in a statement on Thursday. It will also help Nigeria raise non-oil revenues and safeguard oil revenues to promote fiscal sustainability and deliver quality public services, it said.

The decision follows Finance Minister, Wale Edun’s recent comments about the importance of maintaining progress after challenging reforms, such as the removal of the fuel subsidy and a long-standing currency peg, which have worsened inflation.

A statement from the minister’s office announced the approved operations, which includes, “$1.5 billion for the Nigeria Reforms for Economic Stabilization to Enable Transformation (RESET) Development Policy Financing Program (DPF) and $750 million for the Nigeria Accelerating Resource Mobilization Reforms (ARMOR).”

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.”

“This financing package reinforces the World Bank’s strong partnership with Nigeria, and our support towards reinvigorating its economy and fast-tracking poverty reduction, which can serve as a beacon for Africa,” he said.

Despite some early reforms, economic analysts have criticized the government’s consistency in policy implementation. Despite the initial removal of the fuel subsidy, a spike in foreign exchange rates and rising global oil prices compelled the government to discreetly resume subsidy payments.

Forex prices and multiple taxes accelerate inflation

Despite the naira being allowed to float freely and multiple interest rate hikes, foreign exchange prices have remained volatile. They fluctuated significantly in February, gained strength in March, and then lost momentum again by the end of April.

Also, multiple taxes and excise on food products have also contributed to inflation. A presidential task force has recommended eliminating several of these taxes and anticipates progress by the end of the year.