At the backdrop of the sustained revenue pressure and scarcity of foreign exchange the Federal
Government, FG, has opened talks with the World Bank to secure a $1.5 billion loan
Minister of Finance and Coordinating Minister for the Economy, Mr. Wale Edun, who disclosed this
yesterday in an interview with Bloomberg, linked the borrowing to the need to improve supply of
foreign exchange and soften the pressure on exchange rate.
He said, however, that the Central Bank of Nigeria, CBN, has reduced forex exchange backlog to $5
billion.
Bloomberg quoted Edun to have stated, “We’re hoping to get $1 billion or $1.5 billion from the World
Bank” for budgetary support.
He added, “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 scrapped Nigeria’s 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% last month and the naira slumping about 50% in value
against the dollar.
Nigeria is also confident of having access to the eurobond market and may look to tap it later this year, if
rates move 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 still 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 who
want to convert naira into the US currency to repatriate profits and pay bills. That’s 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.
