Nigeria - Economic Stabilization Reforms - RESET Development Policy Financing (DPF) - Release of the Second Tranche - Full Compliance

Jul 19, 2026

Reforms for Economic Stabilization to Enable Transformation (RESET) Development Policy Financing (DPF) for the Federal Republic of Nigeria sets out the progress and conditions leading to release of the second tranche on full compliance. Approved by the Executive Directors on June 13, 2024, the DPF includes two tranches of US$750 million each, with associated financing terms and signed agreements effective in June 2024. The document confirms completion of second-tranche release conditions, continued adequacy of the macroeconomic framework, and progress under the May 3, 2024 Letter of Development Policy despite household and economic pressures.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages7

Reading Time18 min

Tranche Release Document

Executive Summary and Tranche Structure

Background and Macroeconomic Context

Reform Measures and Outcomes

Public Disclosure Authorized Public Disclosure Authorized FEDERAL REPUBLIC OF NIGERIA REFORMS FOR ECONOMIC STABILIZATION TO ENABLE TRANSFORMATION (RESET) DEVELOPMENT POLICY FINANCING (DPF) RELEASE OF THE SECOND TRANCHE – FULL COMPLIANCE TRANCHE RELEASE DOCUMENT 1. This document summarizes the progress made under the Reforms for Economic Stabilization to Enable Transformation (RESET) Development Policy Financing (DPF) for the Federal Republic of Nigeria (Borrower or Recipient), which was approved by the Executive Directors on June 13, 2024. The DPF is a standalone operation comprised of two tranches: (1) first tranche comprising US$750 million credit from the International Development Association (Association) (Shorter Maturity Loan terms with 12-year maturity and grace period of 6 years, Credit No. 7567-NG); and (2) second tranche comprising US$750 million loan from the International Bank for Reconstruction and Development (Bank) (US dollardenominated, commitment-linked loan with 24-year maturity and grace period of 11 years, Loan No. 9683-NG) . The Financing Agreement and Loan Agreement were signed and declared effective on June 19, 2024 and June 26, 2024, respectively. The first tranche was released on July 2, 2024. 2. The Borrower has satisfied the conditions for the release of the second tranche consisting of the US$750 million loan, as outlined in the Loan Agreement and described below. The three tranche release conditions for the second tranche have been satisfactorily completed. The macroeconomic framework continues to be adequate for this operation. Despite considerable pressures on the economy and households, the authorities are staying the course with challenging measures to restore macroeconomic stability and create the foundations for sustained and inclusive growth. Furthermore. the Government has successfully carried out the program as outlined in the Letter of Development Policy, dated May 3, 2024, with progress along all areas supported by the DPF. I. Background 3. Nigeria embarked on a bold, homegrown program of macro-fiscal reforms under the administration which took office in May 2023. If sustained and complemented by additional measures, the reforms have the potential to rid Nigeria of its decades-long over-dependence on oil. This would transform the prospects of Nigeria’s 226m citizens, especially the poor and burgeoning youth population, with regional ramifications since it is the biggest country in sub-Saharan Africa. 4. Prior to the reforms, distortionary and unsustainable macroeconomic policies were impeding investment and growth, and nearly pushed the economy into a full-blown fiscal crisis. Monetary and foreign exchange (FX) policies were increasingly opaque, distortive, and inconsistent with maintaining price stability, including multiple managed and overvalued official exchange rates. The overvalued official exchange rates and large parallel FX market premium not only suffocated investment and growth, but also constituted an implicit FX subsidy to connected parties, imposing large revenue losses through forgone taxes. A large share of the oil revenues which the Federation did receive was absorbed by a costly, regressive, and opaque gasoline subsidy. Non-oil revenues were hampered by one of the lowest tax-toGDP ratios globally (3 .2 percent of GDP in 2022) . The combined fiscal cost of the Premium Motor Spirit (PMS) and FX subsidies was 5.2 percent of GDP in 2022, equivalent to about three-quarters of therevenues that flowed to the Federation. The resultant large and growing fiscal deficits were increasingly financed by deficit monetization through Ways and Means Advances from the Central Bank of Nigeria (CBN), the stock of which increased to 11.6 percent of GDP by end-2022. The economy inevitably fell into a downward spiral of eroding confidence, surging inflation, de facto currency depreciation manifesting through a widening FX premium, declining official reserves, burgeoning

FAQs

What is the purpose of this tranche release document?

It summarizes progress under Nigeria’s RESET Development Policy Financing and explains that the borrower has met conditions required for releasing the second tranche in full compliance.

What are the two tranches included in the RESET DPF?

The DPF is a standalone operation comprising a first tranche of US$750 million from the International Development Association and a second tranche of US$750 million from the International Bank for Reconstruction and Development.

What changes were made to support macroeconomic stabilization under the reforms?

Nigeria moved toward market-based gasoline pricing, implemented major FX policy reforms to unify and regulate the official exchange rate, tightened monetary policy, and strengthened fiscal discipline by ending deficit monetization.

Jul 19, 2026

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