The federal government has announced plans to obtain $2.25 billion from the World Bank.
The Minister of Finance and Coordinator of the Economy, Wale Edun announced this on Saturday during the press briefing at the just concluded World Bank/IMF Spring Meetings in Washington DC, the United States.
The new loan will increase the nation’s total debt to more than N90 trillion, according to experts who spoke on the issue.
The advance from the World Bank is also coming on the heels of President Bola Ahmed Tinubu administration’s promise to break the vicious cycle of government’s reliance on borrowing to fund public project.
The president made the promise last August Tinubu disclosed after inaugurating the Presidential Committee on Fiscal Policy and Tax Reforms, chaired by Taiwo Oyedele, the Executive Chairman of the FIRS in Abuja.
Speaking at the weekend, Edun stated that Nigeria has qualified for the loan, stressing that it is the cheapest loan to get anywhere because of its one percent interest.
He described the loan as a “free lunch”, adding that the pay-back time for the new loan is between 10-20 years.
“We have qualified for processing just this week to the Board of Directors of the World Bank of a total package of $2.25 billion, which 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 similar budgetary support—low-interest funding from the African Development Bank (AfDB), and clearly, there are also ongoing discussions with foreign direct investors across many sectors,” the minister said in far away US on Saturday.
But not a few Nigerians are unhappy that the federal government has made a U-turn on its earlier promise not to rely on foreign loan to finance critical government projects.
For instance, they cited the humungous proceeds from the subsidy removal which, according to analysts is enough to run the government.
Apart from this, the new loan will also worsen the debt burden of the country which stood at over N87 trillion by the end of the last quarter of last year.
The Debt Management Office, DMO, put Nigeria’s total public debt at N87. 91 trillion by the end of the third quarter of 2023.
