Nigeria hopeful of $1.5 bln World Bank loan, to join G20 debt relief initiative
Nigeria is hopeful that the board of the World Bank will consider and approve the $1.5 billion credit facility it applied for early in the year to bridge its budget gap in the face of revenue fall as a result of the impact of Covid-19.
Minister of finance and budget, Zainab Ahmed said Nigeria has fulfilled the conditions for the World Bank loan and the stage is set for its approval by the global financial body.
The lender’s board will discuss the $1.5 billion loan package at their next meeting and possibly approve the request, Ahmed said in an interview Friday with Bloomberg TV.
The National Assembly approved the country’s borrowing plan from the multilateral institution in June, including World Bank, African Development Bank and Islamic Development Bank.
Part of the conditions stipulated by the World for Nigeria to get the loan includes the deregulation of the downstream oil sector, review of tariff on electricity and the alignment of the multiple exchange rate regime operated by the country.
Nigeria has since adjusted the pump price of domestic consumption of petrol, while the Central Bank of Nigeria (CBN) had devalued the naira currency twice this year to bring the official naira rate in pair with the other segment of the forex market.
The government and labour union are currently negotiating the margin of a tariff hike on electricity after the government suspended the initial hike due to pressure from the labour union.
Africa’s most populous country is also considering joining the G-20 debt-relief initiative and is talking to commercial lenders to secure their backing, she said.
“We will consider joining as long as it is safe for us to do so,” Ahmed said. Nigeria couldn’t participate initially because some of the conditions were unfavorable for existing loan commitments with bilateral lenders and other international borrowings.
Other highlights from the interview with Ahmed:
Nigeria may tap the Eurobond market next year, depending on interest rates. The government has to date taken advantage of good demand and liquidity in the domestic market to raise money.
The central bank has cut interest rates to stimulate activity in the private sector and reduce possible job losses as a result of the coronavirus pandemic.
The minister also said that the country will probably exit recession by the end of the year or at most the first quarter of 2021.
She said the government is concerned about the widening gap in the naira’s exchange rate on the official and parallel markets.
“We have been taking measures to close the gap. We hope to get to an even level very soon so the impact of the exchange rate will become moderated.”
Ahmed sees the administration of U.S. President-elect Joe Biden supporting Nigeria’s Ngozi Okonjo-Iweala bid to head the World Trade Organization.