The Federal Government of Nigeria has applied for a $2.5billion loan from World Bank, Hafez Ghanem, bank’s Vice President for Africa has revealed.
He disclosed the World Bank was in talks with the Nigerian government for the concessionary loan.
He, however, noted that Nigeria had received $2.4billion from the global financial institution in 2018.
According to him, we’re talking about a new set of programmes of about the same amount; it should be about $2.5billion.
“It’s important to resolve the problems of the power sector in Nigeria to bring in more investments because you need to bring down the cost of power to make the economy more competitive for the development of industries.
“Nigeria has a comparative advantage in that area because of the youth, a majority of the population is young. So if we want to create jobs, we need to invest much more in the digital economy.”
Ghanem said the World Bank would support Nigeria’s digital transformation because of its potential ability to transform other areas of the economy including industry, agriculture and services, according to a report by Bloomberg.
However, the federal ministry of finance, Budget and National Planning on Tuesday revealed that not less than a whopping N1.11 trillion has been spent to cover debt service obligations in the first six months of 2019.
The ministry’s 2020 budget circular released on Tuesday stated that the federal government aggregate revenue of N6.99 trillion was projected to fund 2019 Budget of N8.92 trillion. This implies a deficit of N1.92 trillion will be financed mainly by borrowing.
The circular, showed that as of June 30th 2019, the total debt service rose to N1.11 trillion in just six months, while the federal government actual revenue was N2.04 trillion, which represents only 58per cent of the N3.49 trillion pro-rata budget.
The N1.11 trillion paid to service debt in half-year 2019 is exactly 54 per cent of the revenue made within the period. This further affirms that debt servicing takes a larger chunk of the country’s revenue.
The rising debt profile and its attendant cost have become worrisome, and the government shows no sign of slowing down as it has already been stated that another sum of N1.7 trillion will be borrowed to finance the 2020 budget.
While debt financing is not entirely bad, the latest disclosure implies that Nigeria’s debt challenge persists, and this may take the country’s debt profile to a new height in the coming year, while capital projects still face some major setbacks. (Bloomberg)