Davos Live

The federal government is in talks with the World Bank for a $1.5 billion loan to support the budget and also provide liquidity in the forex market.

The Minister of Finance and Coordinating Minister of the Economy, Wale Edun stated this in an interview with Bloomberg Tv on the sidelines of the World Economic Forum (WEF) in Davos, Switzerland.

According to the Minister, the reforms with respect to fuel subsidy removal and merger of the foreign exchange market require some form of support from multilateral organisation.

He stated,

• “We’re hoping to get $1 billion or $1.5 billion from the World Bank. It is a matter of discussion at the moment, but we think we will get the support because we are continuing with our reforms.”
• “What we’ve done with fuel subsidies, what we have done in terms of the foreign-exchange market reform, deserve support. We’ve done enough and we deserve to be rewarded imminently.”

Tapping domestic dollar savings to shore up the naira

On the issue of liquidity in the foreign exchange market, the Minister noted that the government’s priority is to stabilise the naira through liquidity. He mentioned that receipts from crude oil sales remain the main source while also looking at domestic dollar savings with and outside the official market.

According to him,

• “The priority is to stabilize the naira, that means getting in the additional liquidity – number one from oil revenue,”
• “We’re also looking to make sure we tap Nigerian savings, in particular domestic dollar savings both inside and outside the formal market. There’s a lot of cash in the Nigerian economy.”

Clearing FX backlog

Furthermore, he noted that the priority of the CBN still remains clearing the FX backlog which he estimates at $5bn.

He said,

• “There is actually liquidity within the banking system and there should be a way of getting the banks to actually help with that backlog, either on a spot or a forward-rate basis,”
• “We believe that if we coral the dollars that are available, we can pay down that backlog almost in one fell swoop.”

The Minister also hinted at Nigeria is contemplating issuing Eurobonds later in the year if the rates are considerably lower stating that major issuers have informed the country of the possibility this year.

The Minister of Finance, Wale Edun, has said that the 2024 budget signalled a new direction in the economic landscape of the country, adding that the federal government needs to move out of the way and allow private investors to grow the economy.  

Edun, who was speaking on the sidelines of the World Economic Forum (WEF) , told newsmen that the federal government is relying on private investors to help grow the economy, create job opportunities and reduce poverty.  

The minister noted that about N300 billion in revenue projection from the private sector has been included in the 2024 budget.  

Edun said,  

• “We are doing all it takes to ensure that we maximize our domestic resources, provide our own equity. And as you know, the budget does have an element of about N300 billion that is meant to be funding from the proceeds of privatization.  
• “And I think it is an indication of the direction of travel of the federal government. A willingness and a commitment for government to move out of the way and allow private investments to maximize the resources, maximize opportunities, create jobs and reduce poverty.” 

Speaking on the recent investment trips of the government, Edun noted that the most advanced countries are determined to maintain a higher interest rate to battle inflationary pressure, resulting in an expensive debt financing for most emerging economies like Nigeria.  

Subsequently, the minister said that this trend has pushed most developing countries to focus on domestic resource mobilization and internally generation of revenue, as opposed to borrowing.  

He said,  

• “As we have moved around the world, we have been at the table in France, the World Bank meetings, the G20 meetings and Arab summit.  
• “The refrain all round is that interest rate remains high and are expected to remain high as the developed world fight inflation. That means that international debt financing as a source of funding is relatively expensive and not advisable as a general policy. 
• “And that has meant focusing on domestic mobilization and raising revenue internally, efficiency of spending by government. The direction of travel is that much more efficiency should be achieved in terms revenue generation and spending.” 

What you should know 

• The 2024 World Economic Forum (WEF) meeting is an annual economy summit hosted Davos, Switzerland. 
• This year’s meeting is set to emphasize the boom in artificial intelligence and guide leaders on navigating innovation and regulation. Over 1,600 business leaders are slated to attend, encompassing 800 CEOs and 60 world leaders. 
• Vice President Kashim Shettima is leading the Nigerian delegation to the Forum. 
• Accordingly, Shettima will join other political and business leaders across the world at the annual forum to discuss global socio-economic and development issues. 

Nigeria’s former Minister of Finance, Ngozi Okonjo-Iweala has reacted to claims that she intends to contest for the position of the World Bank president.

While addressing the claims, Okonjo-Iweala said she isn’t surprised about the assertion, as her 2012 ambition would naturally make convince people into believing she would declare her candidacy this year.

Though she didn’t rule out the possibility of contesting or emerging as the president of World Bank, but Okonjo-Iweala told Richard Quest of CNN at the World Economic Forum in Davos, Switzerland, that she hasn’t declared her candidacy for the position.

“I know that, because I contested the last time in 2012, and many people were asking that question. It is a shareholder’s decision and they have to decide how they want it. Someone has to nominate. “If the right person were to nominate, and if the circumstances are right and people feel I can do the job, yes!”

“No I have not declared my candidacy, you asked a hypothetical question and I answered it fairly. I’m very happy right now, and I just want you to know that I’m enjoying life for a change for a portfolio of what I like.”