FG seeks fresh $1.25bn World Bank loan ahead of 2027 polls

The Federal Government has intensified engagement with the World Bank over a proposed $1.25bn loan aimed at supporting economic reforms, job creation and competitiveness, with the facility now nearing final approval stage.

 

According to a World Bank Programme Information Document, the proposed facility, titled Nigeria Actions for Investment and Jobs Acceleration, is scheduled for presentation to the World Bank Board of Executive Directors on June 26, 2026.

 

If approved, the loan would become the second-largest single World Bank facility secured under President Bola Tinubu, behind the $1.5bn Reforms for Economic Stabilisation to Enable Transformation Development Policy Financing approved in June 2024.

 

At the current exchange rate of N1,361.4 to the dollar, the proposed facility amounts to about N1.70tn.

 

The World Bank document revealed that the project has advanced to the “decision meeting” stage, indicating that appraisal and negotiations have largely been concluded and the operation is approaching final clearance.

 

“The review did authorise the team to appraise and negotiate,” the document stated.

 

The Federal Ministry of Finance is listed as the implementing agency for the programme.

 

According to the World Bank, the loan is designed “to support the government’s efforts to expand access to finance, digital, and electricity services, and strengthen competitiveness through tax, trade, and agriculture reforms.”

 

If approved and fully disbursed, Nigeria’s external debt stock would rise from N74.43tn ($51.86bn) as of December 31, 2025, to at least N76.13tn ($53.11bn).

 

The country’s total public debt would also increase from N159.28tn to approximately N160.98tn, while total debt in dollar terms could rise from $110.97bn to about $112.22bn.

 

Findings showed that the World Bank has approved about $9.35bn in loans and credits for Nigeria between June 2023 and May 2026 across sectors including power, healthcare, agriculture, education, renewable energy, social protection and economic reforms.

 

Approval of the latest facility would raise total World Bank commitments under Tinubu’s administration to about $10.6bn.

 

However, concerns have continued to grow over Nigeria’s rising debt profile and increasing dependence on multilateral borrowing.

 

The Accountant-General of the Federation, Dr Shamseldeen Ogunjimi, recently warned that Nigeria could reject future World Bank loans if approval and disbursement delays persist.

 

“If approvals take more than six months, the Nigerian Government may no longer honour such arrangements,” Ogunjimi said during a meeting with a World Bank delegation in Abuja.

 

He stressed that the loans were not grants and should therefore be processed within timelines that support project execution and fiscal planning.

 

Meanwhile, the World Bank maintained that disbursements are usually tied to project milestones and policy conditions rather than released at once.

 

Data from the Debt Management Office showed that Nigeria’s debt to the World Bank rose by $2.08bn within one year, increasing from $17.81bn in 2024 to $19.89bn by the end of 2025.

 

The debt includes obligations to both the International Development Association and the International Bank for Reconstruction and Development.

 

The proposed loan forms part of a broader World Bank support framework involving programmes such as FINCLUDE, BRIDGE, AGROW, ARMOR and DARES.

 

According to the bank, the operation is expected to support economic growth through improved electricity access, expanded digital services, enhanced agricultural productivity, deeper financial markets and stronger tax mobilisation.

 

“The $1.25bn standalone operation builds on recent progress in restoring stability and underpins the Government’s shift toward an inclusive growth model,” the document stated.

 

The programme will be coordinated by the Ministry of Finance alongside agencies including the Central Bank of Nigeria, Securities and Exchange Commission, Nigerian Electricity Regulatory Commission and the Ministry of Power.

 

Despite the projected benefits, the World Bank warned that the programme carries significant political and governance risks ahead of the 2027 general elections.

 

“Overall, the risk to this DPF is assessed as high. Political and governance risks are elevated ahead of the 2027 elections, with pressures that could delay or reverse sensitive reforms,” the bank noted.

 

Economists have also raised concerns about the sustainability of Nigeria’s growing debt burden.

 

Lagos-based economist, Adewale Abimbola, said concessionary loans could support development if tied to productive projects capable of generating long-term revenue.

 

“Borrowing isn’t bad; what matters is utilisation,” he said.

 

However, development economist, Dr Aliyu Ilias, questioned the rationale for increased borrowing despite government claims of improved revenue following fuel subsidy removal.

 

Similarly, Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, warned that excessive foreign borrowing could worsen exchange rate pressures and deepen fiscal vulnerability if not backed by strong repayment capacity.

 

The Nigerian Economic Summit Group also cautioned that Nigeria’s debt outlook remains fragile despite some improvements in headline indicators.

 

In its latest Debt Burden Monitor report, the NESG stated that the country’s debt pressures remain elevated and that recent improvements largely reflect temporary valuation effects rather than genuine fiscal strengthening.

 

“This pattern indicates that debt pressure has not structurally eased but instead fluctuates within a high-stress band,” the report stated..