FG to Borrow Another $6.9 Billion

• FG to Borrow Another $6.9 Billion

The Federal Government will raise another $6.9 billion from three foreign financial institutions, according to the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed.

The minister said the fund would help the government curb the impact of the coronavirus on the economy and support business activities.

This was after the Fitch Ratings downgraded Nigeria’s long-term foreign-currency issuer to B, down from B+ due to rising financial obligations despite falling foreign reserves, low oil prices and weak revenue generation.

Ahmed listed the three international banks as the World Bank, the International Monetary Fund and the African Development Bank.

Borrowing to complement current resources became imperative after the coronavirus pandemic plunged the commodity market, disrupted global supply chains and led to a surge in capital flight.

A breakdown of the $6.9 billion shows the sum of $3.4 billion would be procured from the IMF, while $2.5 billion would be sourced from the World Bank. The remaining $1 billion is expected to come from the AfDB.

Ahmed said, “We are continuing our engagements with the World Bank, the AfDB, the IDB and the IMF to access concessional funding to support the implementation of the 2020 budget.

“We have also applied for funding from the IMF’s COVID-19 Rapid Credit Facility to draw from our existing holdings with the World Bank Group/IMF.

“This loan will not be tied to any conditionality. However, it is important to clarify that Nigeria does not intend to negotiate or enter into a formal programme with the IMF at this time or in the foreseeable future.”

She added, “Nigeria has a contribution of $3.4bn with the IMF and we are entitled to draw up to the whole of that $3.4bn. We have in the first instance applied for that maximum amount.

“We have requested from the World Bank $2.5bn, from the ADB $1bn. Let me state that the requests are for the nation, both for the FG and the states.”