In a surprising twist of events, the African Development Bank (AfDB) has signalled its willingness to provide an additional $400 million as budget support if requested for. This was made known in a press statement issued by the bank.
“An additional $400 million in support could be considered, if requested and approved by the Board, as part of a larger coordinated effort with other development partners, including the World Bank and the International Monetary Fund.
Vice President of the Bank, Amadou Holt had this week stated that it would channel a planned $400 million investment into specific projects, rather than direct budget support, as rising oil prices had meant Nigeria had improved revenue. Analysts, had however hinged the ADB’s decision on Nigeria’s failure to float the Naira against the dollar.
Why this is good news
Despite the rebound in oil prices and production volumes, Nigeria has a large budget deficit running into trillions of Naira. A greater proportion of revenues are spent on recurrent expenditure. A potential loan gives the country funds which can be used for infrastructural spending. The loan also provides the government much needed foreign exchange since it would be denominated in dollars.
The AfDB also known as Banque Africaine de Development (BAD) was founded on the 10th of September 1964 and comprises three entities: The African Development Bank, the African Development Fund and The Nigeria Trust Fund. Membership includes 80 African countries and Nigeria’s former Minister of Agriculture Akinwunmi Adesina is its current President. The ADB has its headquarters in Abidjan, Cote d’ Ivoire.
