Nigeria seeks World Bank, AfDB loans to cover budget deficit

Nigeria is seeking loans from the African Development Bank (AfDB) and the World Bank to help cover its massive budget deficit.

The deficit is projected at 2.2 trillion naira which is equivalent to 11 billion US dollars.

The budget plan calls for 1.8 trillion naira, that’s about 9 billion dollars to be covered by borrowing from multilateral organisations which the government believes is the cheapest funding option.

“We are in continuing dialogue with the federal government of Nigeria on the preparation of a Development Policy Operation (DPO),” said David Theis, World Bank’s spokesman in a statement.

In a separate statement, AFDB said Nigeria had approached it for a budget support loan of US$1 billion.

“The request for support is being considered by the bank and it is envisaged that an appraisal mission will be in Abuja soon to work with the authorities and major stakeholders on this operation,” said AFDB officials.

The west African country is seeking to fill a growing gap in its budget in the latest sign of the economic damage being wrought on oil-rich nations by tumbling crude prices.

The oil-dependent nation derives more than 90% of its foreign exchange earnings from crude sales.

According to Nigeria’s officials, negotiations with both international lenders are ongoing with an overall objective to provide the lowest possible cost of funds to finance capital projects.