The federal government is negotiating for a new tranche of $2.5 billion concessionary loans with the World Bank, in a move to fund its estimated N2.15 trillion deficit contained in 2020 national budget. Also, the 2019 budget has a deficit of N1.64 trillion to be funded by loans.
World Bank’s Vice President for Africa, Hafez Ghanem, who disclosed this in an interview with Bloomberg, noted that the fresh loan being discussed came on the heels of the $2.4 billion Nigeria borrowed from the bank in 2018.
Ghanem stated: “We’re talking about a new set of programmes of about the same amount, it should be about $2.5 billion.
“It’s important to resolve the problems of the power sector in Nigeria to bring in more investments because you need to bring down the cost of power to make the economy more competitive for the development of industries.”
The Bretton Wood institution official also said that the World Bank is supporting digital transformation in Nigeria because of its ability to transform other areas of the economy including industry, agriculture and services.
“Nigeria has a comparative advantage in that area because of the youth, a majority of the population is young. So if we want to create jobs, we need to invest much more in the digital economy,” he added.
The latest figures released by the Debt Management Office (DMO) showed that the country’s debt increased by N560 billion between December 2018 and March 2019.
As at March 2019, Nigeria’s total foreign debt stood at $25.6 billion (N7.8 trillion) while domestic debt was $55.6 billion (N17 trillion).
Foreign debt constituted 31.5% of the total debt stock while domestic debt constituted 68%.
Commenting on the country’s debt profile, Zainab Ahmed, Minister of Finance, Budget and National Planning, said the country has a revenue problem, not a debt problem.
To this end, the federal government recently announced a proposed increase in value-added tax (VAT) to shore up revenue.