The African Development Bank has called
off a loan to Nigeria that would have helped fund the country’s budget,
the Vice-President for Power, Energy, Climate Change and Green Growth,
AfDB, Amadou Hott, has said.....
He said the bank would likely be
redirecting the money to specific projects in Nigeria rather than give
to the country to fund its budget.
Hott spoke on Monday in an interview with Reuters during a Nordic-African business conference in Oslo, Norway.
The AfDB had been in talks with Nigeria
for around a year to release the second tranche of $400m of a $1bn loan
to shore up its budget for 2017, as the government tried to reinvigorate
the stagnant economy with heavy spending.
But Nigeria refused to meet the terms of
international lenders, including the World Bank, to enact various
reforms such as allowing the naira to float freely on the foreign
exchange market.
Rather than loan Nigeria money to fund
its budget, the AfDB is likely to take at least some of that money and
“put it directly into projects,” Hott explained.
Because prices for oil, on which the
Federal Government relies for about two-thirds of its revenues, have
risen and the naira-dollar exchange rate has improved, the country is
relying less than expected on external borrowing, Hott said.
No one from the Ministry of Finance was immediately available to comment.
Call made to the Special Adviser on
Media to the Minister of Finance, Mr. Oluyinka Akintunde, did not go
through as of the time of filing the report.
Nigeria’s N7.44tn 2017 budget is just
one in a series of record budgets that the government has faced
obstacles funding, pushing it to seek loans from overseas.
In late 2016, the AfDB agreed to lend
Nigeria a first tranche of $600m out of $1bn. But negotiations over
economic reform later bogged down, blocking attempts to secure the
second tranche of $400m million, sources told Reuters then.
Now, AfDB’s loans will be more targeted, Hott said.
“It’s hundreds of millions of dollars,
just in one go, that we were supposed to provide in budget support, but
we will move into real projects,” he added.
Earlier this month, the head of
Nigeria’s Debt Management Office said the country was still in talks
with the World Bank for a $1.6bn loan, which will help plug part of an
expected $7.5bn deficit for 2017.
The administration is also trying to
restructure its debt to move away from high interest, naira-denominated
loans and towards dollar loans, which carry lower rates.
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