World Bank approves $2.25bn loan to support Nigeria’s economic reforms
By Opeyemi Abdulsalam
The World Bank is providing a $750 million loan to Nigeria to support the federal government’s policy reforms.
The loan’s purpose was disclosed in a programme appraisal document dated May 17, 2024.
The document outlined the terms and conditions of the loan, which is aimed at supporting Nigeria’s economic development.
On June 13, Minister of Finance Wale Edun announced the approval of two financial support packages by the World Bank totaling $2.25 billion.
The packages include a $1.5 billion loan for the RESET development policy financing program (DPF) to support economic stabilisation and transformation.
An additional $750 million was approved for the ARMOR program-for-results (PforR) to accelerate resource mobilisation reforms.
In the programme appraisal document, the World Bank said the ARMOR programme contains revenue policy measures such as raising pro-health taxes on tobacco, and alcohol.
The Bretton Woods institution also said the programme contains the introduction of taxes on online betting and gambling, as well as new excise on telecommunication services.
Also, green taxes in the form of excises on vehicles and single-use plastics, as well as the implementation of an electronic money transfer levy were included in the programme.
The World Bank also said the presidential committee on fiscal policy and tax reforms has recommended more structural reform of the value-added tax (VAT) regime.
According to the World Bank, the disbursements under the proposed ARMOR programme will be through nine disbursement-linked indicators (DLIs) structured around the programme’s three result areas.
DLI, also referred to as performance-based financing, is a modality under which funds are disbursed by an investor or donor to a recipient upon the achievement of a predetermined set of conditions.
The World Bank said the DLIs support increased revenues from value-added tax and reduced forgone revenue — which will support phasing out the exemption of interest income from corporate bonds and pioneer status tax incentive scheme.
The Bretton Woods institution also supports increased revenue from pro-health and green taxes — which supports increasing the excise rates on tobacco, and alcoholic products, as well as online betting and gambling services — increased on-time online e-filing and e-payments, enhanced VAT voluntary compliance, improved tax audits, increased compliant trade flows, increased customs revenues through better risk management and enhanced post-clearance audits (PCAs), and enhanced transparency and increased oil revenue flows.
