Fed Govt eyes $1.5b World Bank loan to save naira - Situation Report (2024)

“We’re hoping to get $1 billion or $1.5 billion from the World Bank” for budgetary support, Edun said Wednesday in a Bloomberg Television interview. “It is a matter of discussion at the moment, but we think we will get the support because we are continuing with our reforms.”

Since taking office in May, President Bola Tinubu has carried out very tough reforms, including the scrapping of costly fuel subsidies and relaxed its exchange-rate policy.

The reforms have been welcomed by international investors, but caused a surge in the cost of living, with inflation hitting a 27-year high of 28.9 per cent last month and the naira slumping about 50 per cent in value against the dollar.

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

Also, Nigeria is confident of having access to the Eurobond market and may look to tap it later this year, its rates more sufficiently lower.

“The major issuers and the book runners have told us that there should be a window for Nigeria in the eurobond market,” he said.

Nigeria operates an official exchange rate and provides dollars via the central bank to customers at that level.

But a lack of dollars in the domestic market means there’s a backlog of demand from companies that want to convert naira into the US currency to repatriate profits and pay bills. That has pushed activity into the unofficial market, where the naira changes hands at much weaker levels against the dollar.

Edun said the Central Bank puts the current backlog at about $5 billion, following efforts to pay it down, and he voiced confidence that it could be cleared easily if steps to lift oil revenue and mobilize dollars already in the economy succeed.