By Okechukwu Peace
Coordinating minister for the economy and minister of finance, Ngozi Okonjo-Iweala has rationalized a new $2 billion loan from the World Bank and the African Development Bank (AfDB).
Announcing this in an interactive session with journalists in Abuja, Okonjo-Iweala, the loan was part of the approved 2012-2015 external borrowing plan of the federal government and was in line with its efforts to strengthen the naira.
“We have entered negotiations with international financial institutions, specifically, the African Development Bank and World Bank. You know they have some resources for us already programmed, which is in the borrowing plan,” she said.
“We have asked them to turn these resources into budget support for us. We are negotiating for $2 billion that will come in foreign exchange. “Remember that the terms of this loan from the AfDB are quite reasonable at 3 to 4 per cent compared to what you can get outside, and this is money that they had committed aside for us and we have decided to draw on it, and use it in form of budget support to come in form of foreign exchange.
“It will come in two tranches. It will bring in the needed foreign exchange that will help our private sector people to have access. So, it will alleviate the situation. It’s something that we are working on.” According to analysts, the $2 billion loan in foreign exchange will enable government regulate the high demand of the dollar locally and stabilise the exchange rate of the naira, which fell due to lower government revenue in dollars caused by low oil prices.
The minister added that the loan would pose no undue burden on the nation as it was a concessionary loan, despite the continuous reduction in the nation’s external foreign reserve. However, she encouraged Nigerians to reduce their desire for imported goods, and patronize made-in-Nigeria products in order to conserve the available reserve for more productive uses.