FX crisis: FG seeks $1.5bn loan from World Bank 

FX crisis: FG seeks $1.5bn loan from World Bank 

 

Minister of Finance and Coordinating Minister of the Economy, Olawale Edun, has said that the federal government is seeking a $1.5bn budget support loan from the World Bank. 

 

The government’s decision to borrow from the World Bank appears a deviation from its initial stance to shun foreign borrowing and focus on  domestic mobilisation of funds.  

 

But a recent report by an American multinational financial services firm, JP Morgan, estimates that only $3.7 billion remained as Nigeria’s net foreign exchange (FX) reserves as of the end of 2022. 

 

At the parallel market, a dollar exchanges for more than N1,000, a situation that has escalated the prices of commodities. 

 

At a press conference on Saturday, Edun said the $1.5bn World Bank loan would be helpful to support Nigeria’s economy.  

 

He said the facility, which has zero interest, 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 and programmes, 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.

 

“So, therefore, there is no stigma attached to qualifying for the World Bank funding to help finance development. In this particular case, it has long been in the pipeline, and we are hoping that the funding will come through soon. A lot of hard work is being done. 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.”