The Federal Government on Saturday announced that it has qualified for processing a loan, described as ‘virtually a grant’ of $2.25 billion from the World Bank at 1 percent interest rate.
Wale Edun, the finance minister, disclosed this during a joint press conference of the ministry of finance and the Central Bank of Nigeria (CBN) at the spring meetings of the International Monetary Fund (IMF) and the World Bank, in Washington D.C.
According to him, the package, approved by the Board of Directors of the World Bank, offers a 40-year term with a 10-year moratorium and a nominal 1 percent interest rate.
“If you look at the fact that we have qualified for the processing, just this week to the Board of Directors of the World Bank, of the total package of $2.25 billion of what you can call, I mean, if there is no such thing as a free lunch, but it is the closest you can get to free money. It is virtually a grant. It is for about 40 years, 10 years moratorium and about 1% interest. So that also is part of the flow you can count,” Edun said while responding to BusinessDay questions.
He said Nigeria is set to benefit from budgetary support and low-interest funding from the African Development Bank, adding that negotiations with foreign direct investors are also underway, with promising prospects for substantial investment flows into the country.
Responding to concerns about debt sustainability, Edun highlighted the pivotal role of revenue generation. Oil revenue stands as a primary source, with efforts aimed at maximising its potential for the benefit of Nigerians. He noted that President Bola Tinubu has set ambitious targets to ramp up oil production, aiming to reach 2 million barrels per day from the current 1.6 million.
The increase in oil production is expected to significantly boost liquidity and aid in debt sustainability efforts. However, there’s a parallel emphasis on diversifying revenue sources beyond oil. The government aims to increase tax revenue from 10 percent to 18 percent of GDP within a few years, while also doubling non-oil revenue to around 22 percent.
“These measures are crucial for enhancing our fiscal resilience and ensuring long-term economic stability,” the finance minister emphasised.
As Nigeria navigates economic challenges, securing substantial funding and focusing on revenue diversification emerge as key strategies to drive sustainable growth and mitigate debt risks.
