Nigeria is seeking as much as $1.5 billion from the World Bank to ease dollar shortages and may tap the Eurobond market later in the year if rates move sufficiently lower.
This was revealed by Wale Edun, minister of finance and coordinating minister of the economy, in an interview with Bloomberg TV on the sidelines of the World Economic Forum in Davos, Switzerland on Wednesday.
“We’re hoping to get $1 billion or $1.5 billion from the World Bank” for budgetary support. It is a matter of discussion at the moment, but we think we will get the support because we are continuing with our reforms,” he said.
He added that the major issuers and the book runners have told them that there should be a window for Nigeria in the eurobond market.
The last time Africa’s biggest economy tapped the international debt market was March 2022, when it raised $1.25 billion through a seven-year Eurobond.
President Bola Tinubu in May scrapped a costly but popular petrol subsidy and lifted currency controls in June, which he said was to save the country from going under.
But his actions have worsened inflation currently in double-digits and at the highest level in at least 20 years. The rising inflationary pressures have weakened the purchasing power of consumers, even as businesses grapple with higher operating costs.
The removal of the petrol subsidy tripled the petrol price to N617 from N184, causing public transportation providers such as buses, tricycles and motorcycles to raise fares.
The naira has plunged to record lows across markets since the central bank allowed it to weaken by as much as 40 percent against the dollar in June.
“What we’ve done with fuel subsidies, what we have done in terms of the foreign-exchange market reform, deserve support. We’ve done enough and we deserve to be rewarded imminently,” Edun said.
According to the National Bureau of Statistics, the country’s inflation rate, a measure of the general price level, rose to 28.92 percent in December from 28.20 percent in the previous month.
In the third quarter of last year, foreign investments into Nigeria dropped to $654.7 million, the lowest level since the NBS started collating the data in 2013.
The minister noted that 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 mobilise dollars already in the economy succeed.
“There is liquidity within the banking system and there should be a way of getting the banks to help with that backlog, either on a spot or a forward-rate basis,” he said. “We believe that if we coral the dollars that are available, we can pay down that backlog almost in one fell swoop.”
The government expects oil production to ramp up to 1.78 million barrels per day, from about 1.49 million barrels last month, which should help fire up the economy and bolster its coffers.
“The priority is to stabilise the naira, that means getting in the additional liquidity – number one from oil revenue,” Edun said. “We’re also looking to make sure we tap Nigerian savings, in particular domestic dollar savings both inside and outside the formal market. There’s a lot of cash in the Nigerian economy.”
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