The World Bank says its $750 million loan to Nigeria will support the federal government’s policy reforms.
World Bank made this known in the programme appraisal document — dated May 17, 2024 — on the proposed loan disbursement to Nigeria.
On June 13, Wale Edun, the minister of finance and coordinating minister of the economy, announced the approval of two financial support packages by the World Bank valued at $2.25 billion.
The loan consists of $1.5 billion for Nigeria’s reforms for economic stabilisation to enable transformation (RESET) development policy financing program (DPF) and $750 million for Nigeria’s accelerating resource mobilisation reforms (ARMOR) program-for-results (PforR).
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.
