The Federal Government, on Sunday, said it was in discussion with the World Bank and the Islamic Development Bank, IDB, for a $2.5 billion concessionary loan to support the country in the implementation of this year’s budget.
This is even as it confirmed its discussions with other governments, especially the United States Government on ways to curb illegal capital inflows as a strategic option of mitigating terrorism and other crimes across national frontiers globally.
Giving these hints during the valedictory briefings on the World Bank/IMF Spring Meetings in Washington, DC, the Finance Minister, Mrs. Kemi Adeosun, who led the Nigerian delegation to the Meetings, explained that the loan was required to bridge the N1.8 trillion projected deficit gap, particularly in financing the infrastructure projects.
The Minister hinted that apart from the World Bank, the African Development Bank, other private investors had also indicated their readiness to support the current drive to reposition the economy by providing micro finance support to women entrepreneurs, particularly those engaging in agricultural activities and other productive engagements at micro level.
According to her, “We had discussions with the World Bank around our budget support request and we have been able to have very productive meetings to understand what the next steps are in the process and we are very positive of a good outcome.”
The Minister, who described the meetings as beneficial to the country in view of experiences and relationships entered with relevant agencies and institutions interested in the Nigerian economy, explained that most stakeholders, particularly foreign investors and multilateral institutions, had expressed interest in partnering with the Federal Government to boost the economy.
She said, “The gains are various and important for the Nigerian Government. At least we were able to network with our colleagues, other ministers of Finance of the G7 countries and the G24 countries and compared notes and their experiences. I think this reinforces the validation that the course we have chosen to restructure Nigeria is the right one.
“We got many endorsements and the direction in which we seek to take the Nigerian economy. Specifically we held bilateral meetings with specific bilateral agencies, including the Islamic Development Bank , where we have agreed to work together on a microfinance scheme for women; the Japanese development agency where we have agreed to work together on power projects and they have agreed to make significant investments in the area of power, which I think will be very beneficial for Nigeria and the IFC, similarly we had a meeting with them this morning ( Sunday ), again talking about investment in power and some of our banks to shore up their positions and similarly the AfDB, agreements again for investments in agriculture and collaborations in a range of initiatives that would help us to diversify the economy.”
On the issue of the IMF loan debate, the Minister said that the position of the Nigerian government was to continue to discuss with development finance and other institutions and agencies but that substantial part of funding the country’s projects and programmes would be based on home-grown solutions given the capacity of the country to do this.
She said, “We are not saying Nigeria does not have challenges. We recognize the challenges and we are facing those challenges. But what we want is an opportunity to take those challenges of providing our solutions by ourselves. In fact we are more resilient that mist economies, the country is adjusting and the Government is going through tough economic adjustments on how to spend money and be very efficient, to make sure more revenue come in, trying to block leakages. We are fixing the problems ourselves. And that’s the point we are trying to say .we feel that as Nigerians we have the capacity and we have the will, more importantly both political and the will of the people to sort our problems out in our own way. That’s the point we are making. We are. It denying the fact that there are problems, but we have all it takes to address them and have designed the programmes because we have the local knowledge to correct them.”
Specifically, she reiterated government’s ongoing diversification agenda of the economy and broadening the tax base as key among other measures being pursued by the government to spur growth and achieve macroeconomic stability in the long run.
On his own, the CBN Governor, Godwin Emefiele, spoke on the various monetary policy measures of the government to boost productivity at all levels of the economy, adding that both in the medium and long terms, the various policies, including the forex policy regime, are bound to stimulate the economy.
On the deal with the Industrial and Commercial Bank of China, he said, “Basically talking about the transaction between Nigeria and China, in 2015, basically all countries of the world were challenged. But after 2015, China’s growth turned out to be the strongest. All the countries of the world have challenges but at least China is coming out stronger than her peers.
On the swap, I think the important thing here is that about the time we have been holding discussions with the people’s Bank of China about the swap arrangement which entails the use of RNB for trade transaction between Nigeria and China. So what we did was to sign a mandate between the CBN and the Industrial and Commercial Bank of China which is the biggest bank in the world to act as our agent in consummating the deal between the CBN and the People’s Bank of China and basically the issues are two folds: that it affords Nigeria traders opportunities to open letters of credit using the RNB as a currency, rather than using the Dollar.”
According to him, in furtherance of its statutory mandate, the apex bank is also focusing more to expand lending to key sectors such as agriculture, mining and manufacturing, adding that some of the immediate gains of the fiscal and monetary policies are the increasing foreign investments in the economy.
Emefiele pointed out that it was not in the nation’s economic interest to continue to have indeterminate adjustment of the Naira just on mere speculative premise since doing so without any correlation with structural adjustment of the economy would be counter-productive.
He described the current moves by the government to diversify the economy as desirable to efforts aimed at mitigating the risks posed by the current commodity export-triggered fiscal headwinds to the economy.