- World Bank Disburses $13.63bn Loans, Grants to Nigeria
The World Bank has disbursed a total of $13.63bn in loans and grants to Nigeria as of March 31; a summary of the country’s debt portfolio provided by the bank has shown.
The disbursement is out of a total of $21.44bn that had been approved by the bank’s Board of Directors. The total approval is made up of International Development Association credit of $11.65bn and International Bank for Reconstruction and Development’s loan of $7.14bn.
The IDA is the World Bank Group’s window for concessional lending to less developed countries, while the IBRD is the window for lending at commercial rates.
As of March 31, 2007, the total approval for Nigeria stood at $9.55bn; total disbursement stood at $6.98bn; undisbursed loans were $1.56bn; while borrowers’ obligation stood at $2.14bn.
The latest loan for the country was the $490m IDA credit approved in the first quarter of this year.
With the $13.63bn disbursement, the bank also indicated that Nigeria had $5.94bn that had not been disbursed. The bank defined undisbursed credit as the amount of the loan/credit/grant, calculated in United States dollars equivalent on the date of the summary that was still available to be drawn down.
This means that Nigeria has a total of $5.94bn already approved by the World Bank that is waiting to be drawn down. Some conditions are usually fulfilled before the bank allows a drawdown on already approved loans. Such conditions usually include milestones reached with already approved and drawn down facilities.
With a total of $6.16bn of the total loans already repaid by the country, the World Bank put Nigeria’s current obligation to it at $6.79bn. A total of $16,826,750.56 was repaid to third parties.
The bank defined borrower obligation as the outstanding balance for a loan as of the end of a period in US dollars equivalent. The borrower’s obligation includes the amounts outstanding due to third parties.
Cuba’s Central Bank Suspends US Dollar Deposits Nationwide
Cuba, the island country located where the Caribbean Sea, Gulf of Mexico, and the Atlantic Ocean meet, said this week U.S. dollars will be suspended in the country.
The mandate comes from the country’s central bank and foreign tourists have been told to leave U.S. dollars at home when visiting. The announcement was invoked at a roundtable discussion that was aired on state-sponsored Cuban television.
“In view of the obstacles that the U.S. embargo creates for the national bank system to deposit abroad the U.S. dollars that are collected in the country, a decision was made to temporarily suspend deposits in U.S. banknotes in Cuba’s bank and financial system,” the Central Bank of Cuba (Banco Central de Cuba, BCC) members said.
Yamilé Berra Cires, the vice president of the BCC, explained during the roundtable discussion that at the beginning of the Trump administration’s leadership, the U.S. tightened the embargo’s grip. The United States has had an embargo with Cuba since 1958 and the U.S. has had numerous issues with Cuba during the Eisenhower presidency and Kennedy presidency as well. After the 2008 crisis, the U.S. and Cuba seemed to gravitate toward friendlier terms during the Obama presidency.
However, BCC vice president Berra Cires claims issues have gotten worse since Trump and said 24 foreign banks stopped dealing with Cuba. Berra Cires also said during the roundtable discussion that 95 foreign financial institutions reported on the transgressions of Cuban national banks doing business with counterparties. “It is ever more difficult for Cuba to find international banking or financing institutions willing to receive, convert or process U.S. currency in cash,” Berra Cires further remarked.
“People who will be coming into the country during this time will have to arrive with a currency other than the dollar,” Francisco Mayobre Lence the BCC’s first vice president said.
Of course, after hearing about the USD ban in Cuba, members of the cryptocurrency community wanted Cuba to adopt digital currencies like El Salvador recently did with bitcoin. “It’s like [a] 50-year embargo. It’s really depressing,” one individual wrote about the Cuba situation with America on Reddit. “Will they take crypto now?” another Redditor asked in the r/cryptocurrency thread. Another crypto enthusiast responded to the question and said:
I doubt they want to be the last Latin American country to do so.
Minister-president of the Cuban central bank, Marta Sabina Wilson González explained during the roundtable discussion that Cuba had no choice but to make the decision. “We had no choice but to take this measure, which we are explaining at the Round Table, as we always do when it is a measure that affects the people, who will understand that there is no other option,” the minister detailed.
Kenya Receives $750 Million Loan from World Bank to Boost Economic Recovery
Kenya has received a $750 million loan from the World Bank to support its budget and help the East African economy recover from the effects of the COVID-19 pandemic, the multilateral lender said on Friday.
The Kenyan government has been pushing hard to secure foreign funding to fill a wide budget deficit before its financial year closes at the end of this month.
The $750 million disbursement is part of World Bank’s Development Policy Operations (DPO), which lends cash for budget support instead of financing specific projects.
The bank said some of the funds would go towards setting up an electronic procurement system for government goods and services to improve transparency.
The World Bank said the concessional loan will have a 3.1% annual interest rate. Typically, World Bank loans have zero or very low interest rates and have repayment periods of 25 to 40 years, with a five- or 10-year grace period.
On Thursday, Finance Minister Ukur Yatani presented to parliament the 2021/22 budget, with a deficit of 7.5% of gross domestic product, reduced from 8.7% for the current fiscal year ending this month.
The finance ministry forecasts a economic growth of 6.6% this year, recovering from 0.6% in 2020 when sectors like tourism and related services collapsed due to restrictions imposed to curb the spread of COVID-19.
The World Bank forecasts Kenya’s economy will grow 4.5% this year, and 4.7% in 2022.
President Uhuru Kenyatta, who took the helm in 2013, has overseen a jump in public borrowing. Total debt stands at 70% of GDP, up from about 45% when he took over – a surge that some politicians and economists say is saddling future generations with too much debt.
The government has defended the increased borrowing, saying the country must invest in its infrastructure, including roads and railways.
FG Spends N612.7 Billion on Domestic Debt Servicing in Q1 2021
The latest report from the Debt Management Office (DMO) has revealed that the Federal Government spent a total sum of N612.71 billion on domestic debt servicing in the first quarter (Q1) of 2021.
In the report released on Wednesday, the DMO said the Federal Government paid holders of mature Nigerian Treasury Bills (NTB) N17.23 billion in January, N12.3 billion in February and N5.49 billion in March 2021. Indicating that the Federal Government paid a combined sum of N35.03 billion to NTB holders in Q1 2021.
Similarly, the Federal Government paid N537.783 billion to holders of Federal Government of Nigeria bonds in three instalments of N201.95 billion in January, N79.26 billion in February and N256.58 billion in March 2021.
The Federal Government also paid N308.38 million in three tranches to subscribers of mature FGN Savings Bond. FG paid N111.65 million in January, N97.074 million in February and N99.65 million in March 2021.
Another N8.16 billion was used to settle FGN Sukuk Rentals in March 2021. No payment was made in January and February 2021.
The Federal Government released N31.44 billion as principal repayment “in respect of promissory notes during the quarter under review.
A monthly breakdown revealed that a total sum of N219.29 billion was released to service domestic debts in January, N123.09 billion in February and N270.33 billion in March. Therefore, bringing the total amount spent on domestic debt servicing in the first quarter of 2021 to N612.71 billion.
Nigeria’s total debt rose to N33.1 trillion in the first quarter of 2021, according to the report released by the DMO.
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