World Bank’s $800m loan: FG applies for 18-month deadline extension

Nigeria has requested an 18-month extension on the closing date of the World Bank’s $800 million palliative loan in a strategic move to bolster its social safety net programs amidst rising inflation and economic challenges.

According to a restructuring paper document on the project from the World Bank, the Nigerian government has requested to extend the closing date of the project from June 30, 2024, to December 31, 2025.

The extension seeks to realign project timelines and enhance the efficacy of the National Social Safety Net Program-Scale Up (NASSP-SU).

The document read: “This paper seeks approval from the Country Director for a Level II restructuring of the National Social Safety Net Program Scale-Up project (NASSP-SU, P176935, Credit No. 7019-NG), an US$800 million Investment Project Financing (IPF). The restructuring will extend the project closing date by 18 months from June 30, 2024 to December 31, 2025. The benefit size and duration of the cash transfers under component 1 will also be changed.

“Finally, the chairmanship of the project’s national steering committee will be changed from the Minister of Humanitarian Affairs and Poverty Alleviation to the Minister of Finance. This is the first restructuring and extension of the project’s closing date.

The extension request stems from Nigeria’s ongoing battle with high inflation, which peaked at 33.2% in 2024, exacerbated by the removal of fuel subsidies and exchange rate depreciation.

These economic pressures have pushed millions into poverty, necessitating expanded and sustained support for the vulnerable populations, said Nairametrics.

In a letter dated March 4, 2024, the Federal Ministry of Finance formally requested the extension to ensure comprehensive implementation of project activities.

The government’s ambitious reforms, including the removal of gasoline subsidies and a unified foreign exchange policy, while beneficial in the long run, have heightened short-term economic hardships.