Despite concerns being expressed by analysts about Nigeria’s rising debt stock, the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, announced on Sunday that the Federal Government had secured approval of the World Bank for $2.25 billion loan.
Edun, who gave this hint during a press conference at the annual meetings of the International Monetary Fund (IMF) and World Bank Group, said the loan was approved by the board of directors of the World Bank, and offers a 40-year term, a 10-year moratorium, and a one percent interest rate.
He explained: “If you look at the fact that we have qualified for the processing, just this week to the board of directors of the World Bank of a total package of $2.25 billion.
“There is no such thing as a free lunch but it is the closest you can get to free money.
“It is virtually a grant. It is about 40 years, 10 years moratorium and about one percent interest. That also is part of the flow that you can count”, Edun added.
Similarly, he also disclosed that the country had secured similar budgetary support and low-interest funding from the African Development Bank (AfDB), adding that “there are also ongoing discussions with foreign direct investors.
“Some of these things take longer than you expect but they are relatively advanced discussions on major foreign direct investments flows into the country, specific transactions with specific companies, institutions, and authorities”, the minister stressed.
On the issue of duty waivers costing one percent of the GDP, Edun noted that there was a relatively expensive set of incentives, duty waivers and exemptions on tax which cost about one percent of Nigeria’s gross domestic product (GDP).
He, however, clarified that the government was targeting to increase the tax-to-GDP ratio to 18% from the current about 10% in a few years and also looking to ramp up overall government revenue from about 12% to about 22%, or to virtually double it.
To achieve this, Edun hinted that the Tax and Fiscal Reform Committee would soon roll out a list of measures that will improve efficiency in the tax sector and increase revenue.
