• Wednesday, July 24, 2024
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Fact Check: TikTok video claiming World Bank’s $2.25bn loan to FG is from IMF is false

World Bank to oversee underperforming $500m Nigeria electricity loan

A TikTok video produced by one Rohrs Team, a domestic and international investment consulting firm, has claimed that the $2.25 billion loan arrangement awarded to Nigeria emanated from the International Monetary Fund.

BusinessDay can confirm that the claim is false and that the one per cent interest rate loan was given to the federal government by the World Bank.

The now-viral video which was released on Tuesday, titled ‘The Nigerian IMF Loan: An Economic Analysis’ has generated more than 191 thousand impressions as of today spreading misinformation like wildfire.

“Nigeria has taken another IMF loan, this time for $2.25 billion bringing Nigeria’s total debt obligations to over $110 billion,” @rohrsteam said in the over two minutes video.

For context, the federal government secured $2.25 billion in June at a 1 per cent interest rate through the World Bank loan facility for two development programs.

According to Wale Edun, Nigeria’s Minister of Finance who made the announcement, the loans are part of President Bola Tinubu’s ongoing efforts to stabilise the economy, reposition it for sustained and inclusive growth, and provide urgent support to the poor and vulnerable.

Edun had announced intentions to get the loan at the spring meetings of the International Monetary Fund and the World Bank in April.

Sources from the IMF have however debunked the claims, saying the “disinformation campaign is gross and unfortunate”.

“Completely deep fake. The IMF has only provided emergency lending during Covid to Nigeria. It was called a Rapid Financing Instrument of more than $3 billion,” the source said.

“This funding helped the country going through the pandemic when no other market participants were able to provide resources to Nigeria,” the source added.

The video further claimed that given the depreciation of the naira against the dollar, the country would pay $1 billion each year from 2034 with total repayment of the World Bank loan by 2064 at $30 billion under a 10 per cent inflation rate.

These claims are assumptions and subject to the naira’s value to the US dollar. With the current moderation of the foreign exchange and further gains in sight through aggressive monetary tightening conditions by the Central Bank of Nigeria, the repayment value might not hit such amounts.

Claim: “Nigeria will have to keep a large portion of this money as far in reserves, they also need to end subsidies on oil which will hurt their economy”.

Verdict: The loan is to fund two projects. The first project is the Nigeria Reforms for Economic Stabilization to Enable Transformation (RESET) Development Policy Financing, which is set to receive $1.5 billion.

The second project, Accelerating Resource Mobilization Reforms Programme-for-Results (ARMOR), has proposed funding of $750 million.

For subsidies, the Nigerian government announced the end of fuel subsidies last May, however, the IMF reported that premium motor spirit is still sold at a price lower than the market price, effectively maintaining a partial subsidy.

The claim that the federal government “will enact reforms which will make it easier for western banks to compete with the domestic Nigerian banks” can’t be confirmed at the time of filing this report as the document released by the ministry of finance on the approval of the loan doesn’t contain such information.