The World Bank has approved two significant operations to support Nigeria’s urgent economic stabilization efforts and reform initiatives. A total of $2.25 billion will be allocated, with $1.5 billion directed towards 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) Program-for-Results (PforR).
Immediate Financial and Technical Support
This comprehensive package provides immediate financial and technical assistance to stabilize Nigeria’s economy and enhance support for the poor and economically vulnerable. It aims to support Nigeria’s ambitious, multi-year efforts to increase non-oil revenues and safeguard oil revenues, promoting fiscal sustainability and ensuring the delivery of quality public services.
Critical Economic Reforms
Facing a fragile economic situation, Nigeria has recognized the urgency of implementing critical reforms to address economic distortions and improve fiscal stability. Key measures include unifying multiple official exchange rates to foster a market-determined rate and significantly adjusting gasoline prices to phase out the costly and regressive gasoline subsidy. The Central Bank of Nigeria (CBN) is refocusing on its core mandate of price stability by tightening monetary policy and increasing interest rates to reduce inflation. Additionally, a targeted cash transfer program is being introduced to mitigate the impact of high inflation on poor and economically insecure households.
Government’s Commitment
“We have embarked on bold and necessary reforms to restore macroeconomic stability and put the country back on a sustainable and inclusive economic growth path that will create quality jobs and economic opportunities for all Nigerians,” said Wale Edun, Nigeria’s Minister of Finance and Coordinating Minister of the Economy. “We welcome the support of the RESET and ARMOR programs as we further consolidate and implement our macro-fiscal and social protection policy reforms, consistent with accelerating investment and redirecting public resources sustainably to achieve development priorities.”
World Bank’s Support
Ousmane Diagana, the World Bank Vice President for Western and Central Africa, emphasized the importance of sustaining the reform momentum. “Nigeria’s concerted efforts to implement far-reaching macro-c reforms place it on a new path which can stabilize its economy and lift its people out of poverty. It is critical to sustain the reform momentum and continue to scale up and expand protection to the poor and economically at risk to cushion the effects of cost-of-living pressures on citizens. 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.”
Focus of RESET and ARMOR Programs
The RESET DPF aims to strengthen Nigeria’s economic policy framework by creating fiscal space and protecting the poor and economically insecure. The ARMOR PforR will support efforts to implement tax and excise reforms, enhance tax revenue and customs administrations, and safeguard oil revenues.
About IDA
The International Development Association (IDA) is the World Bank’s fund for the poorest countries. Established in 1960, IDA provides grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve lives. IDA is one of the largest sources of assistance for the world’s 76 poorest countries, 39 of which are in Africa. IDA resources help effect positive change in the lives of the 1.6 billion people living in eligible countries. Since its inception, IDA has supported development work in 113 countries. Annual commitments have averaged $21 billion over the past three years, with about 61% going to Africa.