Posted by Tony Chukwunyem
Nigeria is seeking a $1billion loan from the International Monetary Fund (IMF), the Chief Executive Officer, Financial Derivatives Company Ltd. (FDC), Mr. Bismarck Rewane, has said.
The FDC Chief Executive, who stated this in his firm’s latest presentation to the Lagos Business School (LBS), also said that country is seeking a $2.3billion loan from the World Bank. However, it is his statement that the country is seeking a facility from the IMF that generated ripples in industry circles at the weekend.
Reason: The Federal Government has repeatedly said that while it was negotiating a loan with the World Bank, it was not contemplating holding such talks with the IMF.
Although the respected financial analyst simply stated : “Nigeria seeks $1billion IMF loan and $2.3billion World Bank loan” and did not disclose his source, his statement was enough to spark speculation in some quarters that the Federal Government may have reversed its stance on the issue.
Interestingly, the LBS presentation was made against the backdrop of the IMF/ World Bank Spring Meetings , where, according to Rewane, both organizations stated that while Nigeria’s Economic Recovery and Growth Plan (ERGP) was a “good starting point” for the country, it was “insufficient in boosting confidence.”
He added that stakeholders were concerned about Nigeria’s forex policy.
Specifically, he said that many of the stakeholders were: “ Of the opinion that ERGP was drafted to present case for debt”. stressing that the IMF is concerned that 60 per cent of government revenue is used for interest payment
It will be recalled that the Minister of Finance, Mrs. Kemi Adeosun, said last February that the Federal Government was seeking to borrow at least $1billion from the World Bank and another $1.3billion from China’s Export- Import Bank.
She, however, said there was no need to apply for an IMF programme as the Federal Government was pursuing its own economic reform plan.
She was quoted as saying : “For us, the IMF is really a lender of last resort when you have balance of payments problem. Nigeria doesn’t have balance of payments problems per se; it has a fiscal problem.
We are already doing as much reform as any IMF programme would impose on Nigeria. Nigerians want to take responsibility for their future.
We must have our home-grown, home-designed programme of reform.”
The Minister pointed out that non-oil revenues were improving while the government was fine-tuning an economic reform plan needed to support an application for a loan of at least $1billion from the World Bank.
She said: “Non-oil revenue is improving very steadily. All the measures we have put in place are beginning to yield fruits,” adding : “Oil production is back up; we are very grateful for that, but we should be careful for getting excited about that.”
The Federal Government needs to plug a gap in its record N7.3trillion 2017 budget proposal, which contains a number of measures aimed at stimulating the economy.
The government has already borrowed $1.5billion Eurobond, but there is still speculation it may need IMF funding