800 Million Loan: Director Of The World Bank Chaudhuri Says That Borrowing Is Nigeria's Only Option

Nigeria, the most populous country in Africa, must borrow money to cover its budget deficit through 2023, according to Shubham Chaudhuri, the country director for the World Bank in Nigeria.

This information was provided by Chaudhuri in a Saturday interview with Channels Television.

The president of the World Bank was responding to its offer of a $800 million concessionary loan to Nigeria.

Nigerians and other stakeholders have strongly criticized the World Bank's $800 million loan, which comes at a time when the country's total debt, including the Central Bank of Nigeria's Ways and Means loan, is approaching N77 trillion.

To cover its N10.7 trillion budget deficit, Nigeria has no choice except to borrow, according to Chaudhuri.

He pointed out that regardless of whether the gasoline subsidy is eliminated, the country still needs to turn to lenders to pay its deficits.

In comparison to loans from the domestic market, Eurobonds, and other sources, he claims that the $800 million from the World Bank is the most cheap option for Nigeria right now.

"Everyone needs to be clear on the fact that whether Nigeria receive the $800 million world bank loan or not, 2023 Nigeria's budget is already having a projected deficit of N10.7 trillion, that is if the fuel subsidies are removed by June but if not, the deficit would be N12 trillion or more. The deficits have to be financed; the fact is that Nigeria would be taking more debts to finance its budget deficits. Unfortunately, with revenue still being low as they are, Nigeria has no choice.

"The question is how do you finance the deficits? It will reach N10.7 trillion or N12 trillion; our financing is available but other choices exist. You can borrow from the Eurobond market, the domestic market or the Central Bank(Which had happened in the past with the ways and means of financing); all of those sources are quite expensive," he said.

Last week, President Muhammadu Buhari requested in a letter to the National Assembly that the $800 million loan from the World Bank be approved.

Buhari had already authorized a 2023 budget of N20.51 trillion with a N10.78 trillion deficit.

Zainab Ahmed, the minister of finance, budget, and national planning, had suggested that fuel subsidies would be eliminated by the end of June in order to minimize the budget deficit. The Ministry later changed its mind about the removal of fuel subsidies, though.