The federal government is considering getting a $1.5 billion loan from the World Bank as one of the measures to support the budget and also provide liquidity in the forex market.
Minister of Finance and Coordinating Minister of the Economy, Wale Edun, made this known in an interview with Bloomberg Tv on the sidelines of the World Economic Forum (WEF) in Davos, Switzerland.
“We’re hoping to get $1 billion or $1.5 billion from the World Bank. 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.
The Minister noted that the reforms with respect to fuel subsidy removal and merger of the foreign exchange market required some form of support from multilateral organisation.
“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 stated.
He further pointed out that the government’s priority is to stabilise the naira through liquidity, to address the issue of liquidity in the foreign exchange market.
He stated that receipts from crude oil sales remain the main source while also looking at domestic dollar savings with and outside the official market.
“The priority is to stabilize the naira, that means getting in the additional liquidity – number one from oil revenue.
“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,” Edun added.
The Minister said the government was prioritizing clearing the FX backlog which he estimates at $5 billion, saying, there is liquidity within the banking system and there should be a way of getting the banks to actually help with that backlog, either on a spot or a forward-rate basis.
Edun also disclosed that Nigeria is considering issuing Eurobonds later in the year if the rates are considerably lower, stating that major issuers have informed the country of the possibility this year.
