Nigeria’s debt to rise above N87trn as Tinubu’s government sets to take fresh $2.2bn loan from World Bank

Nigeria’s debt will soon increase above N87 trillion as the government of President Bola Ahmed Tinubu is set to receive around $2.2 billion single-digit interest loan from the World Bank and another budget support facility from the African Development Bank.

The Minister of Finance, Wale Edun disclosed this during a press briefing at the end of Nigeria’s activities at the World Bank/International Monetary Fund Spring meeting in Washington DC, the United States on Saturday, April 20, 2024.

According to him, the loans will from diaspora remittances, foreign portfolio investments, and facilities from the World Bank and other international development partners.

He stated, “We have qualified for the processing just this week to the Board of Directors of the World bank of a total package of $2.25 billion of what you can call ‘the closest you can get to a free lunch’- virtually a grant. It’s for about 10- 20 years moratorium and about 1% interest.

“In addition, there is a similar budgetary support – low-interest funding from the African Development Bank (AfDB) and, clearly, there are ongoing discussions with foreign direct investors across many sectors.”

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Edun also tapped issuing dollar-denominated securities specifically targeted at Nigerians in the diaspora and those with foreign-denominated savings in Nigeria as another measure to attract forex inflows into the country.

He further highlighted the efforts of the fiscal side of the economy in complimenting the recent monetary policy reforms by the Central Bank of Nigeria.

According to the minister, the issuing of government securities at an interest rate closer to the CBN’s monetary policy rate is an indication of the collaboration between both sides of the economy in tackling inflation in the country and attracting forex inflows.

With the development, Nigeria’s total public might soon increase to N89.85 trillion

Recall that the public debt reached N87.91 trillion by the end of the third quarter of 2023, according to data from the Debt Management Office (DMO).

The DMO said this marks a 0.61 per cent increase from the June 2023 figure of N87.38 trillion.

The data revealed the combined domestic and external debts of the federal government, the 36 states, and the Federal Capital Territory, equivalent to $114.35 billion as of 30 September.

The debt figure is attributed to a decrease in the nation’s external debt, dropping from $43.16 billion in June to $41.59 billion in September. However, there was a moderate increase of N1.80 trillion in domestic debt.

The DMO explains the reduction in external debt by citing the redemption of a $500 million Eurobond and the payment of $413.859 million as the first principal repayment of the $3.4 billion loan secured from the International Monetary Fund (IMF) in 2020 during the COVID-19 pandemic.