Finance Minister Reveals Why Nigeria Is Borrowing $3bn From World Bank

Mrs Zainab Ahmed, the Minister of Finance, Budget and National Planning, has stated the reason behind the Federal Government’s decision to borrow $3bn from the World Bank.

The minister noted that the fund would be deployed for reforms in the power sector.

Ahmed stated this while speaking with newsmen on the sidelines of the World Bank/International Monetary Fund meetings holding in Washington DC, United States.

The minister noted that she will be having a meeting with the management of the Bank to present how the fund would be disbursed for the project.

She noted that with the desire of the government to develop the power sector, the loan would be used for the development of transmission and distribution networks to enhance the delivery of electricity.

She said, “There is a proposed $2.5bn to $3bn facility for the power sector development programme in Nigeria and this will include development of the transmission networks and the distribution networks as well as removing the challenges that we currently have now in the electricity sector.”

“We are going to have a full meeting to discuss the power sector recovery programme and back home we have been working a great deal with the World Bank to design how this programme will be implemented.”

The minister when questioned on the issue raised by the IMF about the country’s debt which stands at #25.7tn, she claimed that Nigeria is not in debt.

Ahmed noted that the government need to increase its revenue-generating capacity in order to boost the revenue to about 50 per cent of Gross Domestic Product.

She said with Nigeria’s current revenue to GDP ratio stands at just 19 per cent, it’s underperformance is significantly straining the government’s ability to service its debt obligation.

The minister said, “Nigeria does not have a debt problem. What we have is a revenue problem.

“Our revenue to GDP is still one of the lowest among countries that are comparable to us. It’s about 19 per cent of GDP and what the World Bank and IMF recommended is about 50 per cent of GDP for countries that are our size. We are not there yet. What we have is a revenue problem.”

“The underperformance of our revenue is causing a significant strain in our ability to service debt and to service government day-to-day recurrent expenditure and that is why all the work we are doing at the ministry of finance is concentrating on driving the increase in revenue.”

When asked why the Federal Government decided to increase the revenue projection in the 2020 budget to N8.9tn at a time when government revenue performance is less than 60 per cent, she said a lot of measures are being put in place to correct the anomaly.