Nation
Nigeria to offset $800m World Bank loan in 25 years
Adebayo Obajemu
The next administration after President Muhammadu Buhari, will be saddled with the repayment of $800m loan approved by the World Bank as subsidy palliative.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, had last week, disclosed to media that the Federal Government had secured $800m from the World Bank to provide post-petroleum subsidy palliatives for over 50 million Nigerians ahead of June 2023.
The financing agreement document for the National Social Safety Net Programme – Scale Up between the Federal Republic of Nigeria and the International Development Association of the World Bank was made available on Tuesday.
The reason for the loan is to expand coverage of shock-responsive safety net support among the poor and vulnerable and strengthen Nigeria’s national safety net delivery system till June 30, 2024.
The document signed by the Nigerian Finance Minister and the World Bank Country Director for Nigeria, Shubham Chaudhuri, on August 16, 2022, showed that the loan was based on concessional financing.
Concessional finance is below-market-rate finance made available by major financial institutions, such as development banks and multilateral funds, to developing nations to speed up development objectives.
The $800m loan secured by the Federal Government attracts a maximum commitment charge rate of one-half of one per cent per annum on the Unwithdrawn Financing Balance, and a service charge of three-fourths of one per cent per annum on the withdrawn credit balance, according to the document.
The interest charge is given as one and a quarter per cent per annum on the withdrawn credit balance.
