Nigeria to borrow almost $7bn from World bank and IMF as Covid-19 decimates government finances

NIGERIA intends to borrow almost $7bn from the World Bank and the International Monetary Fund (IMF) over the coming months to fund the black hole in the country's finances that have come about as a result of the coronavirus crisis.

More or less wholly dependent on crude oil export revenue, Nigeria passed a 2020 budget predicated on selling 2.1m barrels of oil at a price of $57 a barrel. However, with the economic collapse brought about by the Covid-19 crisis, prices have dropped to about $25 a barrel and exports could fall to as low as 1m barrels this year as a result of weak demand.

With barrels of unsold oil stockpiling at Nigeria's export terminals, the government has no way of funding its $28bn budget, so has no option but to resort to borrowing. Finance minister Zainab Ahmed, revealed that the government will now approach the World Bank, IMF and African Development Bank (AfDB) to raise $6.9bn to fund the 2020 budget.

According to Mrs Ahmed, the sum of $3.4bn would be sourced from the IMF, $2.5bn from the World Bank while the balance of $1bn is expected to be raised from the AfDB. Out of the World Bank facility of $2.5bn, she said the sum of $1.5bn would go to the federal government, while the balance of $1bn would go to the 36 state governments.

According to the finance minister, the money is expected to come into the country within the next six to 12 weeks. She said the $3.4bn from the IMF would not be tied to any conditionality, adding that so far, about 80 countries had applied for such funding facility.

Mrs Ahmed said: “We are continuing our engagements with the World Bank, the AfDB, the International Development Bank and the IMF to access concessional funding to support the implementation of the 2020 budget. We have also applied for funding from the IMF’s Covid-19 Rapid Credit Facility to draw from our existing holdings with the World Bank Group/IMF.

“This loan will not be tied to any conditionality, however, it is important to clarify that Nigeria does not intend to negotiate or enter into a formal programme with the IMF at this time or in the foreseeable future. Nigeria has a contribution of $3.4bn with the IMF and we are entitled to draw up to the whole of that $3.4bn.

"We have in the first instance applied for that maximum amount. We have requested from the World Bank $2.5bn, from the ADB $1bn and let me state that the requests are for the nation, both for the federal government and the states.”