By Adewale Sanyaolu with Agency reports
With a 2016 budget deficit of about $5 billion, and oil price hovering around $31, Nigeria and Angola, Africa’s two biggest oil producers, have opened talks with the World Bank to help them cope with low crude prices, weakening currencies and strained public finances.
Though, Nigeria has held exploratory talks with the World Bank on borrowing to help fund part of its N6.08 trillion budget in 2016, Minister of Finance, Kemi Adeosun, explained that, Nigeria, the country has not applied for any emergency loans.
Adeosun had said in January, Nigeria was planning to borrow as much as $5 billion to help fund a budget deficit due to a slump in oil revenues, of which $4 billion might come from international institutions and the rest from Eurobonds.
“We have held exploratory talks with the World Bank. We have not applied for emergency loans,” she had said.
Recall that the World Bank and other institutions like the International Monetary Fund (IMF) have recommended that Nigeria and Angola devalue their currencies which both trade officially at a huge premium in the secondary market.
But President Muhammadu Buhari, is against devaluing the naira, saying it would amount to killing it.
The naira trades at around 197 against the dollar officially compared to street rates as low as 305, while Angola’s kwanza is worth 155/$ but changes hands at more than 400 against the greenback on the secondary market.
Angola also held talks with the World Bank between January 25-29, about securing funding support in a deal that would see Africa’s second biggest oil producer implement unspecified reforms, the state news agency reported.
Borrowing from international institutions such as the World Bank would be a cost-effective way to raise money to fund the increased capital expenditure in the 2016 budget, she said.
The Financial Times had earlier reported that the West African nation had asked the World Bank and the African Development Bank for $3.5 billion in emergency loans.
In a written statement, Adeosun’s Nigeria’s Finance Minister also said. Nigeria was looking at “options” to borrow from the African Development Bank and export credit agencies such as China Exim Bank “due to their concessionary rates of interest”.
Nigeria expects a budget deficit of 3 trillion naira in 2016, up from 2.2 trillion naira previously estimated, as a slump in oil revenues has eroded public finances and hit its currency.