Nigeria currency reform delays $1.5bn World Bank loan
Aderemi Ojekunle is a Businessamlive Reporter.
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Charles Abuede
A financing delay from the World Bank could leave Nigeria battered by low prices of crude oil, as the multilateral lender is probably not going to approve a genuinely necessary $1.5 billion for Nigeria in August as earlier arranged due to worries over desired reforms. Sources say they are not convinced about the reforms.
The World Bank, which has said Nigeria could be making a beeline for its most noteworthy fiscal crisis in 40 years, had aimed to carry the loan to its board for endorsement this month, but talks over what Nigeria will do to secure the loan were incomplete, Reuters reported. A source close to the matter further revealed that World Bank loans are often dependent upon reforms.
Though, no demands have been requested yet but were “suggesting” a more unified, adaptable exchange rate. Fuel subsidies and power tariffs are also being negotiated. Meanwhile, the CBN has said Nigeria’s balance of payments gap will be $14 billion this year. In a related development, Nigeria’s finance ministry in a statement directed inquiries to the World Bank.
In an announcement, the bank said discussions were at an advanced stage but confirmed that it had not introduced the loan request to the board. According to the statement, “Of particular importance are the steps the government is taking to marshal the needed financial resources for a pro-poor response to the crisis and undertake the reforms that will help ensure a robust recovery”.
With the country’s inabilities to completely finance a record N10.8 trillion budget, Nigeria’s approach of supporting the naira has gotten all the more expensive since the slide in oil price, as the nation depends on oil for 90 per cent of its foreign exchange.
The CBN has devalued the naira twice this year, yet that was insufficient for the World Bank, which needed more full reform of the naira policy. Reuters said. Additionally, Nigeria said it had wiped out fuel subsidies through a “floating” price cap, yet two of the sources said the World Bank felt the instrument was not adequately straightforward.