Federal Government Engages In Negotiations With World Bank For A New $1.5 Billion Loan Deal

Federal Government Engages In Negotiations With World Bank For A New $1.5 Billion Loan Deal....KINDLY READ THE FULL STORY HERE▶

Against the backdrop of persistent revenue challenges and a shortage of foreign exchange, the Federal Government (FG) has initiated discussions with the World Bank to secure a $1.5 billion loan. Minister of Finance and Coordinating Minister for the Economy, Mr. Wale Edun, revealed this in an interview with Bloomberg, attributing the borrowing to the necessity of enhancing the supply of foreign exchange and alleviating pressure on the exchange rate……CONTINUE READING

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Edun mentioned that the Central Bank of Nigeria (CBN) has managed to reduce the forex exchange backlog to $5 billion. In his statement to Bloomberg, he expressed the hope of obtaining either $1 billion or $1.5 billion from the World Bank for budgetary support. He emphasized that ongoing reforms in the country make them optimistic about receiving the necessary support.

Since assuming office in May, President Bola Tinubu has implemented significant reforms, including the elimination of Nigeria’s expensive fuel subsidies and a relaxation of its exchange-rate policy. While these reforms have been positively received by international investors, they have also led to challenges, such as a surge in the cost of living, with inflation reaching a 27-year high of 28.9% last month, and the naira depreciating by approximately 50% against the dollar.

Edun defended these reforms, stating, “What we’ve done with fuel subsidies, what we have done in terms of the foreign-exchange market reform, deserve support. We’ve done enough and we deserve to be rewarded imminently.”

Nigeria is also considering accessing the eurobond market, with confidence that it may tap into it later this year if interest rates decline sufficiently. Edun mentioned that major issuers and book runners have indicated that there should be an opportunity for Nigeria in the eurobond market.

While Nigeria continues to operate an official exchange rate and provides dollars through the central bank at that level, a scarcity of dollars in the domestic market has resulted in a backlog of demand from companies seeking to convert naira into US currency for profit repatriation and bill payments. Edun acknowledged the current backlog of about $5 billion and expressed confidence that it could be easily cleared through efforts to boost oil revenue and mobilize existing dollars in the economy.

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