FG In Talks With World Bank For Fresh $1.5bn Loan
The Federal Government is currently engaging the World Bank on a fresh $1.5bn loan.
Abbreviated as HOPE, the loan is titled ‘Nigeria Human Capital for Opportunities and Empowerment’ based on information obtained from the website of the Washington-based institution.
The objective of the loan is “to strengthen systems for improved delivery of basic education and primary health services in participating states.”
The loan is meant to be implemented in 2024 pending approval by the board of the World Bank Group.
It was also discovered that there was another loan titled: ‘Nigeria Macro-Fiscal Reforms for Economic Stability and Economic Transformation’.
However, the amount for this other loan was not disclosed as of the time of filing this report.
There were also pending discussions on five other loan projects, according to findings.
There has been a significant increase in both domestic and external debts within three months.
The domestic debt rose by 79.18 per cent from N30.21tn, while the external debt rose by 69.28 per cent from N19.64tn in the first quarter of 2023.
In its 2022 Debt Sustainability Analysis Report, the DMO warned that the Federal Government’s projected revenue of N10tn for 2023 could not support fresh borrowings.
According to the office, the projected government’s debt service-to-revenue ratio of 73.5 per cent for this year is high and a threat to debt sustainability.
It noted that the government’s current revenue profile could not support higher levels of borrowing.
In a report titled, ‘Report of the Annual National Market Access Country Debt Sustainability Analysis,’ the debt office said, “The projected FGN debt service-to-revenue ratio at 73.5 per cent for 2023 is high and a threat to debt sustainability.
“It means that the revenue profile cannot support higher levels of borrowing. Attaining a sustainable FGN debt service-to-revenue ratio would require an increase of FGN revenue from N10.49tn projected in the 2023 budget to about N15.5tn.”
The DMO stated that the government must pay attention to revenue generation by implementing far-reaching revenue mobilisation initiatives and reforms, including the Strategic Revenue Growth Initiatives and all the pillars with a view to raising the country’s tax revenue to Gross Domestic Product ratio from about seven per cent to those of its peers.
The Federal Government will be unable to borrow a lot as it nears its self-imposed debt limit of 40 per cent, according to the DMO.
To reduce borrowing and budget deficit, the DMO stated that the government should encourage the private sector to fund some of the capital projects that were being financed from borrowing through public-private partnership schemes.
It added that the Federal Government could reduce borrowing through the privatisation and/or sale of its assets.
