Skip to content

SME Guide

Nigeria Seeks $1.5 Billion from the World Bank to Boost Naira and Fund the 2024 Budget

As Nigeria grapples with economic challenges like budget deficits and naira devaluation, the government is seeking $1.5 billion in aid from the World Bank. The loans would provide budgetary support and help stabilise the declining naira currency.

Finance Minister Wale Edun said in an interview that the funds would likely carry zero interest rates and could be disbursed soon under the World Bank’s International Development Association program. The programme provides low- or no-interest loans to poor countries undertaking key reforms.

Nigeria is also considering a Eurobond issue towards the end of 2024. Eurobonds have given Nigeria access to crucial foreign capital amidst tough conditions. Last year, Nigeria raised $1.25 billion via a Eurobond.

The World Bank’s aid would help plug Nigeria’s N9.18 trillion budget deficit for fiscal 2024, now reduced to 3.88% of GDP from over 6% last year. New borrowing makes up part of the deficit financing plan outlined by President Bola Tinubu.

The naira falls to a record low due to dollar shortages.

The loans also aim to ease severe dollar shortages, battering the naira currency. High demand and speculative pressures have led to the naira’s continued depreciation. It recently fell to a record N1,320 per dollar on parallel markets.

Central Bank interventions like a $2 billion payout to clear forex sale backlogs have not fixed imbalances between official and parallel exchange rates. Last week, the naira closed at N878 to the dollar on the official NAFEX market after a near-5% drop.

With Nigeria retaining World Bank assistance eligibility, officials hope reform efforts make their case for aid compelling. The dollar loans would provide urgent stabilisation funds as the country contends with naira pressures, budget constraints, and broader economic uncertainty.

Leave a Reply

Your email address will not be published. Required fields are marked *