Wale Edun, Nigeria’s Minister of Finance and Coordinating Minister for the Economy, has disclosed ongoing negotiations with the World Bank to secure a $1.5 billion concessionary loan for budgetary support.
Edun has suggested that the loan is likely to be approved in the near future.
Edun, who confirmed this during a press conference held on the sidelines of the World Bank and IMF annual meetings, stated that the loan request might be on the agenda for discussion at Monday’s upcoming Federal Executive Council meeting.
According to the minister, talks about the loan request have been in progress for an extended duration, and it is anticipated to be provided at an interest rate close to zero, addressing concerns related to mounting debt servicing obligations.
He said:
- “Talks with the World Bank on $1.5 billion budget support, is correct. The World Bank is the number one multilateral development bank for helping developing countries fund own projects and programs. It has free money through the International Development Association (IDA).
- “It has this for the poorer countries and right now I think we qualify as one of the countries that are almost in the normal window of the World Bank funding but also some concessionary IDA funding.
- “That means that effectively, the interest rate will be zero. Therefore, there is no stigma at all attached with qualifying for World Bank funding to help finance development.
- “In this particular case, it’s long been in the pipeline, and we are hoping that that funding will come through soon. A lot of hard work is being done. There’s a Federal Executive Council meeting on Monday that should be able to discuss this as well as other initiatives for the financing of reasonable terms.
- “We’ve talked about the high money costs, but the World Bank money is the cheapest.”
What You Should Know
Recall that in 2020 the World Bank approved a swooping $1.5 billion credit facility for the country, specifically aimed at helping Nigeria bridge its budget funding gap.
This funding was especially crucial due to the dual impact of a sharp decline in global oil prices and the onset of a challenging recession within the nation.
In addition, Nigeria equally secured $3.4 billion in emergency financial assistance from the International Monetary Fund (IMF) through its Rapid Financing Instrument during that period.
Fiscal policy on government expenditure must be significantly reduced. Size of government is too large and unnecessary spending in non economic drivers such as Pilgrimages ( xtian & muslim ) should stop. Prioritize expansionary business funding .Doing this , the fiscal policy will begin to tilt towards monetary policy for equilibrium to stabilize the naira. If fx supply from this loan exceed demand, then price will fall and naira will become more stabile.