The World Bank, led by its country director, Shubam Chaudhuri, stressed earlier on Thursday, during a high level discussion with government officials and the media, that it has not tabled for consideration the $1.5 billion policy support loan requested by Nigeria.
Instead, the applications that the board will consider on Monday, December 14, are two separate ones of $750 million each. The first is the $750 million support for state-level efforts on fiscal transparency (reported by BusinessDay in October), and the other is the $750 million for food security and the local economy, also for the states.
On the $1.5 billion budget support, the World Bank country director praised and recognised the measures the government has taken on reforms in the last few months but argued that “there needs to be a little bit more”. This confirms a BusinessDay story two months ago that the bank was stalling due to policy credibility concerns.
BusinessDay had reported in October that the World Bank is uncertain about the government’s commitment to reform.
“There is scepticism about the commitment to structural reform. They are trying to ensure the reforms started are followed through and the commitment is credible. Therefore, unless the i’s are dotted and the t’s are crossed, the fund will not be released,” our source said then.
Read also: Coronavirus induced school closures cost students $17trn in lifetime earnings – World Bank
In the call also, Chaudhuri mentioned that the bank’s exposure to Nigeria as at 2018 stands at about $7.5 billion. Since then, the bank has granted additional $3 billion, and if successful, the applications to be considered on Monday would raise the figure by $1.5 billion. Nonetheless, some of these have not been disbursed because the necessary steps to activate them have not been taken.
Early in the year, following the emergence of Covid-19 and the consequent fall in oil prices, the federal government had requested for $3.2 billion from the World Bank. Out of this $3.2 billion, $1.5 billion is for policy-based budget support, $750 million for fiscal relief for the states, and $750 million to help states directly with programmes on improving standard of living and support for farmers. These two related to states are the applications to be considered on Monday.
The $200 million, which has already been provided, is to make available $85 million for the Nigeria Centre for Disease Control (NCDC), established in 2011, and $115 million for states for fighting Covid.
Following oil price decline to less than $30 per barrel on average between March and May 2020, and an oil price outlook of about $40 for the remainder of the year, the government faced a $15-20 billion financing gap. The expectation of the government then is that the World Bank funding, in addition to the $3.4 billion received from the International Monetary Fund (IMF) in April, will help plug some of the gaps that had emerged since then, but this has to be based on necessary reforms.
