The Nigerian federal government is on the brink of securing a substantial budget support loan of $1.5 billion from the World Bank.
This development was confirmed by the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, during a Nigerian Delegation briefing at the International Monetary Fund (IMF)/World Bank Annual Meeting held in Marrakech, Morocco.
Mr Edun said, “On the talks with the World Bank on $1.5billion budget support; that is correct.
The World Bank is the number one multilateral development bank helping developing countries or funding developing countries projects and programmes and sectors.
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“It has free money through International Development Association (IDA). It is for the poorer countries; and right now, I think we qualify as one of the countries that can borrow in the normal window of World Bank funding but also some concessionary IDA funding, and that means that effectively, the interest rate will be zero.”
He, however, noted that there is no stigma attached to qualifying for World Bank funding to help finance development, saying, “In this particular case, it has long been in the pipeline, and we are hoping that funding would come through soon.
“There is a Federal Executive Council meeting on Monday that should be able to discuss this, as well as other initiatives for financing on reasonable terms. We have talked about the high costs of money, the World Bank money is the cheapest.”
On IMF’s advice to increase taxes and interest rate, the minister said the country had no loan programme in the offing with them, and so, not privy to where they proposed to Nigeria to increase taxes and interest rates.
Using the CBN to fund budget
Mr Edun said, “Regarding Ways and Means, President Bola Ahmed Tinubu has a commitment not to go beyond the statutory limits.”
He assured that monetary and fiscal authority would work together.
“Monetary policy that’s talking about tightening the money supply that increases interest rates and on the fiscal side government expenditure includes paying the interest and the principal on government debt,” he said.
Speaking on Nigeria’s high debt service, the minister said, “I think that in terms of debt restructuring, I agree with you that you don’t have to wait; what you do is to look for opportunities to maybe lengthen debt, improve the condition under which that debt is borrowed.”