The Federal Government is to access $1.5 billion World Bank’s budget support loan, Finance and Coordinating Minister of the Economy Wale Edun has said.
The facility which is meant for the revival of the nation’s economy was okayed by the Federal Executive Council (FEC) yesterday.
FEC also approved $80 million in financing from the African Development Bank (AfDB) for the Ekiti Knowledge Zone Project EKZ and 30 days for the implementation of the government-organised Labour’s agreement on petrol subsidy removal palliatives.
Edun told reporters after FEC’s meeting that the $1.5 billion, which would be provided by the International Development Association (IDA), a financing arm of the World Bank, is a low-interest instrument.
He also explained that the AfDB $80 million facility for the EKZ project is aimed at helping young people have better insight into a knowledge-based economy, technology and communications.
His said: “We approved today (yesterday) the application for financing from the World Bank and in particular, the International Development Association, which is really virtually free or zero interest lending arm or financing arm of the World Bank. The total is $1.5 billion.
“ The world today is one of high interest rates, as the developed world looks to fight inflation. They do it by restricting money and keeping interest rates high so that you can get inflation down. What that means is that interest rates for everybody else, become not just high but very painful, if not unaffordable within that context.
“Nigeria has been able to make the kind of macro-economic moves; has been able to take tough decisions to restore balance in the economy in the government’s finances that have warranted support and has elicited even support from the multilateral development banks. It is on the basis of that that the World Bank is willing to consider and process on our behalf $1.5 billion of concessional financing, relatively cheap financing and financing that will be dispersed relatively quickly.
“That was what was presented to the Federal Executive Council and the members approved that we go ahead with that financing given that it is affordable.
“Secondly, an $80 million financing from the African Development Bank was also approved by the Federal Executive Council. This financing is for a project in Ekiti called the Ekiti Knowledge Zone Project EKZ. An EKZ that is basically to support young people and their quest to take on technology, to use it to be employed, to be trained and to benefit from being part of the knowledge economy, being part of the technological wave that is present very much in Nigeria, which is becoming a bigger and bigger share of the economy.”
Asked why Nigeria has continued to borrow, the minister replied: “Concessionaire is cheap and it is needed.”
On whether the government would consider IMF’s advice to increase taxes and interest rates, Edun said: “We are looking to take advice that said ‘grow your revenue.’”
Also, Labour and Employment Minister, Simon Lalong, said that FEC approved a 30-day implementation plan for the Memorandum of Understanding (MoU) recently signed by the government and labour.
Lalong said: “We presented a memo from the Federal Ministry of Labour and Employment and the memo was basically on the agreement between government and the labour. You are already aware that 15 items are parts of the agreement.
“But we went beyond mere agreement, we told them that something different this time is happening because one, part of the agreement is to file it in the court of law which we have set the process already.”
“And the other one was the presidential approval. There cannot be any presidential approval more than the Federal Executive Council.
“It was agreed that within 30 days, there must be evidence of implementation.”
