Mr Wale Edun, the Minister of Finance and Coordinating Minister of the Economy has disclosed that the federal government has applied for a $1.5billion loan from the World Bank to support the budget.
He made this known at the Nigerian Delegation briefing on the margin of the International Monetary Fund (IMF)/World Bank Annual Meeting in Marrakech, Morocco. He said that the World Bank funding was not a sign of weakness, but a way to finance development projects.
“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.
“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.
“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, Edun stated that the country has no loan programme in the offing with them, and so, not privy to where they proposed to Nigeria to increase taxes and interest rates.
This shows that in the first four months of President Bola Tinubu’s administration, Nigeria has obtained a total of $1.95bn in loans from the World Bank for various development projects.
The first loan was $750m, approved on June 9, 2023, to support Nigeria’s power sector reform and improve electricity access and reliability.
The second loan was $500m, approved on June 22, 2023, to promote women’s economic inclusion and empowerment in Nigeria.
The third loan was $700m, approved on September 21, 2023, to enhance the learning outcomes and opportunities for adolescent girls in Nigeria.
The World Bank comprises two institutions: the International Bank for Reconstruction and Development and the International Development Association. The IBRD lends to middle-income and creditworthy low-income countries, while the IDA provides concessional loans and grants to the poorest countries.
The World Bank is Nigeria’s largest multilateral creditor, with a debt of about $14.51bn as of June 30, 2023.
This debt consists of $14.51bn from the IDA and $485.75m from the IBRD as of the second quarter of the year.
According to the Debt Management Office, Nigeria’s total public debt rose to N87.38tn at the end of the second quarter.
This represents a 75.29 per cent or N37.53tn increase from N49.85tn recorded at the end of March 2023.
The total public debt comprises N54.13tn domestic debt and N33.25tn external debt.
The domestic debt accounts for 61.95 per cent of the total debt, while the external debt accounts for 38.05 per cent.