FG to raise $3b loan from World Bank, AFDB

As part of continuous efforts to raise adequate funds to meet national funding needs, the Federal Government of Nigeria said that it was close to securing $3 billion funding from the World Bank and African Development Bank.

The Minister of Finance, Mrs. Kemi Adeosun, who recently clarified why the Nigerian government did not see International Monetary Fund’s, IMF”s, loan window as amongst its preferred bailout options, said that Nigeria was in discussion with the World Bank, Rwanda and other multi-lateral institutions about getting loans to bridge the gap in the 2016 budget.

Adeosun, who was in London this week to address international investors, disclosed that the country will issue $1billion Eurobond in the third quarter of 2016; this was in line with what she had earlier said that rather than taking so many loans, that government was determined to use internally-designed strategies to mitigate the gaps in public finance.

Kemi Adeosun According to Kevin Daly, a money manager at Aberdeen Asset Management Plc, who attended the talks, Adeosun said the government was committed to a budget deficit of not more than N2.2 trillion ($11.1 billion), or 2.1 percent of Gross Domestic Product, GDP.

Nigeria has sold dollar bonds twice, the last time in mid-2013, when it raised $1 billion of five- and 10-year debt. The government has said it would fund the fiscal gap with about $10 billion of debt, half of it in foreign currencies.

Yields on Nigeria’s $500 million of securities maturing in July 2023, fell five basis points to 7.44 per cent in London by 10:22 a.m. and have dropped 1.2 percentage points this year. Nigeria’s Eurobonds have gained 8.5 percent in 2016, compared with the average of 10.4 percent for high-yielding emerging-market sovereign dollar-debt tracked by Bloomberg.

Three-month naira forwards dropped 0.2 per cent to 274.5 per dollar, suggesting traders see the currency trading near that level in coming months. Adeosun said Nigeria would probably post budget deficits for at least three years and that its debt-to- GDP ratio would rise to 20 percent from around 13 percent in that period, according to Gregory Kronsten, an analyst at Lagos-based FBN Quest who was at the meetings.

Nigeria has the largest economy in Africa but growth prospects and per capita GDP forecasts fell significantly lower than expectations.

According to the report prepared by an audit firm, the terminal operators, who have invested over N200billion between 2006 and 2015, have lost an estimated N58.9billion in earnings over the period.