Approval for loans totalling $2.25 billion from the World Bank is anticipated on June 13, 2024, with the Federal Government set to receive the fresh funding through two significant development projects. The primary project that is involved in this initiative includes the Nigeria Reforms for Economic Stabilization to Enable Transformation Development Policy Financing, which is expected to receive $1.5 billion. The NG Accelerating Resource Mobilization Reforms Programme-for-Results is also expected to secure $750m in funding for the second project. Recent reports have suggested that the government is considering reinstating certain taxes and fiscal policies, such as the telecom tax, to secure a $750m Loan.
The official document outlining this plan, available on the World Bank website, mentions the potential reintroduction of excises on telecom services and EMT levy on electronic money transfers within the Nigerian Banking System, in addition to other taxes. Yet, new information indicates that the loan may have been nearly secured by the administration. During the past month’s spring meetings of the International Monetary Fund and the World Bank, Wale Edun, the Minister of Finance, revealed that the country had met the requirements to secure the loan with an Interest Rate of only one percent, which he described as almost a grant.
This fund will help the country improve its economic policies and revenue.
Board of Directors for the World Bank has given the green light to a financing deal that includes a 40-year repayment period, with a 10-year grace period and a minimal interest rate of one percent. His announcement further revealed that the World Bank’s Board of Directors approved their application this week, granting them the substantial package. This funding, which can be considered as close to a free gift as possible, includes a 10 to 20-year grace period and a small interest rate. According to the global lender’s website, the two projects have been designed to strengthen Nigeria’s Economic Stability and boost its ability to mobilise resources.
Also, the allocation of funds is anticipated to support the country as it works to improve economic policies and increase Government Revenue generation, which is, therefore, crucial for the country’s Financial Stability and economic strength in the long run. According to the report, the main goal of the PforR initiative is to increase non-oil Revenue and protect oil and gas income from 2024 to 2028 at the national level, focusing on significant tax, excise, and administrative changes.
VAT compliance, audit efficiency, and other factors will boost earnings.
Three key focus areas are captured in the plan which includes, making changes to Tax and excise policies to boost VAT revenue and excise rates for Eco-friendly goods, improving tax and customs departments to ensure better VAT compliance and audit efficiency, and protecting oil and gas earnings through greater transparency and net revenue support. The PforR initiative offers guidance and aid to boost taxpayer and trader compliance by assisting the Federal Inland Revenue Service and Nigeria Customs Service with technical support.
Importance of boosting non-oil revenues while protecting oil and gas revenues was also emphasised in the report. By enhancing transparency in NNPCL’s financial and operational performance through audits and improved reports to FAAC, including all pertinent information, the goal is to increase the amount of oil and gas revenue transferred to the Federation. Furthermore, the DPF plan for Nigeria includes a self-sufficient process with two parts aimed at aiding major changes that coincide with the government’s economic stabilisation and recovery goals.
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Moreover, the focus of this initiative revolves around achieving four main objectives that fall under two main categories: enhancing fiscal oil revenues from 1.8% of GDP in 2022 to 2.7% by 2025, increasing non-oil fiscal revenues from 5.3% to 7.3% during the same timeframe, broadening social support systems to aid 67 million at-risk Nigerians, and elevating the import worth of goods that were previously prohibited from $11.3 million to $54.6 million by the year 2025.
