The Minister of Finance and Coordinating Minister for the Economy, Wale Edun, said on Saturday that discussions are underway with the World Bank regarding a $1.5 billion concessionary loan to bolster budgetary provisions.
The loan is expected to materialize soon amid concerns over Nigeria’s rising debt profile.
Edun, who is saddled with mammoth responsibility of revitalizing the economy, confrims the development during a press briefing at the annual meetings of the World Bank and International Monetary Fund (IMF). He said that talk about the loan has been going on for long and would be a topic of discussion when the Federal Executive Council (FEC) convenes on Monday.
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Nigeria’s public debt stock, which accelerated in the last eight years under former President Muhammadu Buhari, has risen to N87.38 trillion as at June 30, 2023, according to the Debt Management Office. The DMO which describes the debt stock as unsustainable and a threat, said in June that Nigeria’s debt service-to-revenue ratio in 2023 stands at 73.5 percent.
However, Edun who stated that discussions regarding the loan request have been underway for a considerable period, assured that the loan would come with a near-zero interest rate, alleviating concerns about escalating debt service commitments.
“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 International Development Association (IDA),” he said.
“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.”
He clarified that this essentially implies an interest rate of zero. Consequently, there would be no negative connotations associated with obtaining World Bank funding to support developmental projects.
“In this particular case, its 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 financing of reasonable term.
“We’ve talked about the high costs of money, but the World Bank money is the cheapest,” he said.
Abebe Aemro Selassie, the Director of the African Department at the IMF, said on Friday that Nigeria’s current debt situation is sustainable. He also clarified that the country is not in discussions with the IMF about debt restructuring.
This suggests that Nigeria is not in debt trouble for now. However, Selassie advised the government to reduce the burden of servicing and acquiring debts, emphasizing the need to implement tax reforms to enhance revenue generation,
Nigeria has earlier obtained a $3.4 billion emergency financial assistance facility from the International Monetary Fund (IMF) through its Rapid Financing Instrument.