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Saturday, July 13, 2024

World Bank Approves $2.25 Billion Loan for Nigeria Amid Economic Crisis

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ABUJA, Nigeria — The World Bank has approved a $2.25 billion loan for Nigeria to bolster revenue and support economic reforms that have led to the most severe cost-of-living crisis in many years for Africa’s most populous country.

The bank stated late Thursday that the majority of the loan — $1.5 billion — will aid millions who have faced escalating poverty since President Bola Tinubu assumed power a year ago and took drastic measures to rectify the country’s faltering economy.

“The bulk of the loan — $1.5 billion — will help protect millions who have faced growing poverty since a year ago when President Bola Tinubu came to power and took drastic steps to fix the country’s ailing economy”.

The remaining $750 million, according to the bank, will support tax reforms and revenue and safeguard oil revenues threatened by limited production due to chronic theft.

President Tinubu’s economic reforms, which include ending decades-long but costly fuel subsidies and unifying the multiple exchange rates, have resulted in skyrocketing inflation that is at a 28-year high.

Under increasing pressure from citizens and workers protesting the hardship, Tinubu’s government announced in May that it was seeking the loan to support its long-term economic plans.

The government also stated that it is taking steps to increase foreign investment inflows, which fell by 26.7% from US$5.3 billion in 2022 to US$3.9 billion in 2023, according to the Nigerian Economic Summit Group think tank.

Nigeria already has a high debt burden that has limited the government’s spending capacity. Its reliance on borrowings for public infrastructure and social welfare programs has resulted in a nearly 1,000% surge in public debt over the past decade.

However, the World Bank stated that it is “critical to sustain the reform momentum” under Tinubu. According to Ousmane Diagana, the World Bank vice president for Western and Central Africa, the government’s economic policies have put the country “on a new path which can stabilize its economy and lift its people out of poverty.”

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