Nigeria is actively pursuing $1.5 billion in aid from the World Bank to combat the severe dollar shortage contributing to the decline of the naira.
Finance Minister Wale Edun expressed optimism, stating, “We’re hoping to get $1bn or $1.5bn from the World Bank” for budgetary support, emphasizing the country’s commitment to economic reforms.
Edun also revealed that Nigeria is considering issuing a Eurobond in late 2024 as part of its financial strategy amid challenging economic conditions.
Eurobonds, denominated in foreign currencies, offer Nigeria a vital mechanism to navigate its financial landscape.
The Finance Minister emphasized ongoing reforms and stated, “It is a matter of discussion at the moment, but we think we will get the support because we are continuing with our reforms.”
Nigeria has a history of utilizing Eurobonds to raise debt for infrastructure funding and economic development. The country previously entered international debt markets with a $1.25 billion Eurobond issuance in 2022.
In addition to the World Bank aid, Nigeria is grappling with a substantial budget deficit for the fiscal year 2024, standing at N9.18 trillion.
President Bola Tinubu outlined a multifaceted financing approach, including new borrowings, proceeds from privatization, and drawdowns on multilateral and bilateral loans for specific development projects.
The naira’s persistent decline, fueled by dollar shortages and speculative activities, has widened the gap between official and parallel market exchange rates.
In response to mounting economic challenges, the Central Bank of Nigeria recently disbursed $2 billion to settle outstanding foreign exchange forwards, aiming to boost liquidity and stability in the foreign exchange market.
As Nigeria faces a record low for the naira and significant economic hurdles, the Finance Minister assured that the $1.5 billion World Bank loan would be used to finance development, with the facility expected to be disbursed soon.