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Nigeria in Talks to Borrow $3.5 Billion as Oil Saps Budget

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Nigeria’s government is in talks for concessionary loans worth $3.5 billion from the World Bank and African Development Bank to help finance a planned record budget this year, Finance Minister Kemi Adeosun said.

While discussions are going on, a formal request hasn’t yet been made to the World Bank for $2.5 billion and the AFDB for $1 billion, Adeosun said by telephone on Sunday. The government plans to tie them to specific capital projects, she said. A request hasn’t been made for assistance from the International Monetary Fund.

Lawmakers in Nigeria’s parliament will begin deliberations this week on the record 6.1 trillion naira ($30.7 billion) 2016 spending plan, she said. Nigeria depends on oil for almost all exports and two-thirds of government revenue, and public finances are being squeezed amid a 7 percent drop in crude prices this year.

 Africa’s top oil producer wants to spend its way out of slowing economic growth. To plug a record budget gap of 3 trillion naira, Adeosun said Jan. 21 that authorities will borrow about $5 billion in external debt from multilateral agencies and the Eurobond market.

Adeosun said non-deal roadshow meetings with investors to sound out a potential sale of $1 billion of Eurobonds will start in February. Nigeria has issued dollar bonds twice, most recently in 2013.

The West African nation’s economy probably grew 3.2 percent last year, the slowest pace since 1999, according to a Bloomberg survey of economists.

 

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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