FG Seeks $1.5 Billion Loans to Strengthen Naira & Improve Budget

Nigeria pursues $1.5 Billion aid from the World Bank to address the severe dollar shortage impacting the decline of the naira in the country.
Old Naira Notes
Old Naira NotesGoogle Photos

"We hope to get $1bn or $1.5bn from the World Bank for budgetary support," Finance Minister Wale Edun stated to Bloomberg on Wednesday.

According to the minister, Africa's largest economy might also issue a Eurobond in late 2024, asserting that, with the ongoing economic reforms, the country merits support.

Eurobonds, denominated in foreign currencies, provide Nigeria with a mechanism to navigate its financial landscape amid challenging economic conditions.

The minister remarked, "It is a matter of discussion at the moment, but we think we will get the support because we continue with our reforms."

Nigeria has previously issued Eurobonds to raise debt for infrastructure funding and economic stimulation.

In 2022, Nigeria ventured into international debt markets with a $1.25bn Eurobond issuance, marking its eighth foray into this financial arena, as per the Debt Management Office.

Subsequently, the country redeemed a $500m Eurobond issued in July 2013 in the following year, part of a dual-tranche of $1bn, 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 $1.5bn World Bank loan would come with a zero-interest rate.

Nigeria is presently contending with about N87tn debt, deemed "manageable" by the International Monetary Fund, although it acknowledged the high interest payment for the country.

The minister stated that the new World Bank loan would be utilized for financing development, revealing that the facility would be disbursed to Nigeria very soon.

He said, “On the talks with the World Bank on $1.5bn 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.”

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