FG has not applied for World Bank loan, says Adeosun

“The truth is that Nigeria, as part of the plans to fund the 2016 budget now undergoing the approval process of the National Assembly, has indicated an intention to borrow N1.8trillion principally for investment in capital projects to stimulate the economy…” Nigeria depends on oil for nearly all exports and two-thirds of government revenue, and public finances are being squeezed amid a 7% drop in crude prices this year.

However, a Nigerian economist, Opeyemi Agbaje said it is obvious the country is in need of such loan.

“We have held exploratory talks with the World Bank”.

The Minister also explained that options with multi-lateral agencies including the World Bank and African Development Bank (AfDB) were being explored.

The Minister of Finance, Mrs. Kemi Adeosun, had recently said Nigeria was planning its first return to the bond markets since 2013. The loan requests are “in anticipation of getting the budget approved” and are “not part of an International Monetary Fund package”, Adeosun said.

“As far as possible, our foreign borrowing will be tied to specific capital projects”. But Nigeria’s likely borrowing costs have been rising alongside its budget deficit. But both loans would carry far fewer conditions than one from the IMF, which does not believe Nigeria needs a fully fledged worldwide bailout at this point.

A projected deficit of $11bn, or 2.2 per cent of gross domestic product, had already risen to $15bn, or 3 per cent, due to the recent turmoil in oil markets.

The naira trades at around 197 against the dollar officially compared to street rates as weak as 305, while Angola’s kwanza is worth 155/$ but changes hands at more than 400 against the greenback on the secondary market. A rainy-day fund that had $22bn in it at the time of the 2008-09 global financial crisis now has a balance of $2.3bn.

World Bank spokesman David Theis said the multilateral lender was in discussions with Nigeria to provide Development Policy Operation funding, which can take the form of a loan, grant or credit.

“No application for loans has been made; we are simply discussing options for funding 2016 budget”, she added.

But the new government is also facing questions about its handling of the economy.