Nigeria seeks fresh $1.5bn loan from World Bank

As part of the efforts to address the fiscal gap in the 2023 budget, Nigeria’s federal government on Saturday disclosed that it had concluded plans to secure a fresh $1.5 billion loan facility from the World Bank.

The Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, disclosed this while speaking with journalists at the ongoing 2023 Annual Meetings of the World Bank and the International Monetary Fund (IMF) in Marrakech, Morocco.

Edun, who confirmed his emergence as the chair of the Africa Group 1 constituency and leader of all the African nations in the executives of the IMF, pointed out that Nigeria has become almost number one on people’s list when they want to look at where to invest.

He promised that there would be a coordination of monetary and fiscal policies, just as he pledged that
President Bola Tinubu’s administration will not breach Ways and Means limits.
“On the talks with the World Bank on $1.5 billion 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 either 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,” Edun told journalists.

Shedding more light on the proposed budget financing, the finance minister said: “In this particular case, it has long been in the pipeline, and we are hoping that funding will come through soon.“There is a Federal Executive Council meeting on Monday (tomorrow) 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,” Edun added.
The minister pointed out that the country has taken bold and courageous steps to attract investments.
“Regarding the opportunity to attract investments, there have been many conversations and, in all honesty, the narrative is that with the bold courageous steps that Nigeria has taken, we are now at the forefront, almost number one on people’s list when they want to look at where to invest; that is now the narrative.
“Nigeria is definitely on the right path; we have taken the right decision for the economy to recover and for it to attract Foreign Direct Investment (FDI) and as well, I will add, domestic investment to recover full economic growth, job creation and at the same time, achieve inclusivity of women and young people,” he added.

He assured that the federal government was taking steps towards cutting down its expenditure.
“We’ve talked about tax reform, and that tax reform will include looking at expenditures on taxes, waivers, duties, and tax exemptions. So, that is very much part of the plan,” he added.
According to Edun, the newly constituted fiscal policy and tax reform committee that was recently inaugurated by the federal government was focused on domestic revenue mobilisation.
The committee, he stressed, was purely focused on, “domestic resource mobilisation and that includes, in no small part, coming up with our own plans and ideas rather than having them imposed from outside by those who know less than we do about our situation.”
Commenting on Ways and Means, which was a major challenge for the immediate past administration, Edun said: “Regarding Ways and Means, President Bola Ahmed Tinubu had even while campaigning as a candidate, President-elect and President has a commitment not to go beyond the statutory limits.

“One of his priorities is the rule of law – sticking to agreements, sticking to the law. And so, his commitment is to come within the limit for Ways and Means, which essentially means overdraft borrowing from the central bank.
“However, having made that commitment and given that direction of travel, I think the idea and commitment is to come within whatever is the statutory limit as soon as possible,” Edun said.
Additionally, the minister pledged to ensure a harmonious relationship between monetary and fiscal policy, saying there was a natural coordination and relationship.

He added: “Mr. President is a man who keeps his word. And one of his priorities is the rule of law and as such, he will keep to the letter and the spirit and the autonomy of the central bank. So, it’s within that constraint that the coordination will take place,” he added.
The minister also disclosed his emergence as the chair of the Africa Group 1 constituency and leader of all the African nations in the executives of the IMF.

He said: “We can put it down to our first success in leading Sub-Saharan Africa at the World Bank and the IMF. It is the achievement of the third chair of the SSA on the board of the IMF.  
“There are three representing Sub-Saharan Africa (SSA) at the World Bank. There were only two representing SSA at the IMF. Just today, we have achieved a third chair. This is the combination of years of negotiation and it was finally sealed today.

“That is something we are very happy about. This is because it increases the participation and representation in the governance of these important institutions by African nations south of the Sahara,” the minister explained.

He said the federal government is aware of the current level of hardship Nigerians are going through as a result of the removal of subsidy on fuel and exchange rate unification, adding, “these are painful reforms and Mr. President is a man of empathy who promised not to leave the vulnerable and poor behind.

“As you know there is a set of interventions being rolled out, which day by day, should improve things. More food has been grown, fertilisers are being released, Compressed Natural Gas (CNG) transport is the order of the day, while the government buses and conversion kits are on the way; and this initiative is by the private sector.

“So, day by day, we are moving closer to affordable and even cleaner energy simply because the price of petroleum products has been put where it stands rather than having cheap fuel, which is below the market price and its value. Now, you are seeing the right value and that is making the move to cleaner and finer energy,” the minister said.