…To shore up Naira, finance 2024 budget
The Federal government is shopping for a fresh $1.5billion loan from the World Bank, to tackle the severe dollar shortage – which has contributed to the decline of the Naira – and to finance the 2024 budget.
The Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, said this on Wednesday during an interview with Bloomberg.
“We’re hoping to get $1billion or $1.5billion from the World Bank” for budgetary support, Edun said.
The minister said the new World Bank loan would be used to finance developmental programmes, disclosing that the facility would be disbursed to Nigeria very soon.
He 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 programs, and sectors.
“It has free money through the International Development Association. It is for the poorer countries and right now, I think we qualify as one of the countries that can borrow from the normal window of the World Bank funding, but also some concessionary IDA funding; and that means that effectively, the interest rate will be zero.”
According to the minister, Africa’s largest economy may also issue a Eurobond in late 2024, adding that with the current economic reforms, the country deserves support.
Eurobonds, denominated in foreign currencies, offer Nigeria a mechanism to navigate its financial landscape amidst challenging economic conditions.
The minister said: “It is a matter of discussion at the moment, but we think we will get the support because we are continuing with our reforms.”
Nigeria has issued Eurobonds in the past to raise fund to fund infrastructure and boost its economy
In 2022, Nigeria entered the international debt markets with a $1.25billion Eurobond issuance, marking its eighth venture into this financial arena, according to the Debt Management Office.
Subsequently, in the following year, the country redeemed a $500m Eurobond issued in July 2013 as part of a dual-tranche of $1billion, held for a tenor of ten years at a coupon of 6.375 per cent per annum.
During a press conference in October 2023, at the World Bank/International Monetary Fund Annual meeting in Marrakech, Morocco, the minister mentioned that the $1.5billion World Bank loan would be coming with zero interest rate.
Nigeria is currently battling with about N87trillion debt, which the International Monetary Fund said was “manageable,” but noted that the interest payment was high for the country.