The African Development Bank's board approved a $600 million loan for Nigeria on Wednesday aimed at helping Africa's largest economy plug its budget deficit as it grapples with its first recession in more than 20 years, a senior bank official said.
The loan is the first tranche of a total $1 billion budget support package. The second disbursement of $400 million is dependent upon the implementation of reforms, the bank's Nigeria country director Ousmane Dore said.
Dore said one of the main triggers for the release of the remaining tranche will be when the government spells out its plan for overcoming its current economic challenges.
"The economic recovery plan that the government is working on must be a package of comprehensive reforms, including even exchange rate policy, the consistency with regards to the monetary policy and structural reforms," he said.
If it meets the bank's reform requirements, the tranche is expected to be approved by the board early next year.
Nigeria's economy has been shrinking largely as a result of a plunge in oil prices since mid-2014. Attacks on energy facilities in the Niger Delta have also cut crude production by around a third since the start of the year.
The bank noted that oil generates around 70 percent of Nigerian government revenues. The drop in prices has left Nigeria struggling to fund a record 6.06 trillion naira ($20 billion) 2016 budget that aims to stimulate growth by tripling capital expenditure.