The Federal Government has asked the African Development Bank for a $1bn (N199bn) loan to help fund an increased budget deficit, the bank said on Tuesday.
The AfDB, according to Reuters, stated that it was considering the loan to the continent’s largest economy and oil producer, where the drop in crude prices has hit growth, and that an appraisal mission would visit soon to work with the authorities.
The Federal Government is planning to borrow as much as $5bn to help fund a deficit due to the slump in global oil prices, which has also sent the naira into a tailspin.
The Minister of Finance, Mrs. Kemi Adeosun, said the government had held exploratory talks with the World Bank and looked at options to borrow from the AfDB and China Exim Bank.
She had earlier said that about $4bn might come from international institutions and the remainder from eurobonds.
Nigeria expects a budget deficit of N3tn this year, up from an initial N2.2tn estimate.
The budget, presented by President Muhammadu Buhari at the end of last year, is sitting with the National Assembly, which aims to pass it at the end of this month.
The spokesperson for the Minister of Finance, Festus Akanbi, told our correspondent on the telephone on Tuesday that there was nothing unusual about the government’s resort to borrowing as it had stated in the budget proposals that it would look to borrow from internal and external sources to finance the budget deficit.
He, however, said the government would only take loans with the lowest interest rates in order to make them beneficial.