By Becky Usman

The Nigerian Federal Government is currently in negotiations with the World Bank for a fresh loan of $1.5 billion, according to reports by Sunday PUNCH.

This loan, referred to as HOPE (Nigeria Human Capital for Opportunities and Empowerment), aims to enhance the delivery of basic education and primary healthcare services in participating states. The loan is expected to be implemented in 2024, subject to approval by the World Bank Group’s board.

Additionally, there is another undisclosed loan, titled “Nigeria Macro-Fiscal Reforms for Economic Stability and Economic Transformation,” currently under discussion.

Several other loan projects are also on the table, including $300 million for the Solutions for Internally Displaced Persons and Host Communities project, $500 million for the Rural Access and Agricultural Marketing Project, $750 million for the Nigeria Distributed Access through Renewable Energy Scale-Up Project, $700 million for Sustainable Power and Irrigation for Nigeria Project, and $500 million for NG Accelerating Resource Mobilization for Reforms PforR.

The outcome of these discussions will determine whether these loans will be approved and implemented.

Since the beginning of President Bola Tinubu’s administration, Nigeria has already secured a total of $1.95 billion in loans from the World Bank in the first four months. These loans are aimed at various sectors, including power, women’s empowerment, and adolescent girls’ education.

The World Bank, through its arms, the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA), has been a significant creditor to Nigeria. As of June 30, 2023, Nigeria’s total debt to the World Bank stands at approximately $14.51 billion, comprising $14.51 billion in IDA debt and $485.75 million in IBRD debt.

Nigeria’s total public debt reached N87.38 trillion at the end of the second quarter, representing a 75.29 percent increase compared to N49.85 trillion recorded at the end of March 2023. Of this debt, domestic debt constitutes 61.95 percent, while external debt makes up the remaining 38.05 percent.

This significant increase in debt has raised concerns, particularly as the Debt Management Office (DMO) has warned that the projected revenue of N10 trillion for 2023 cannot support further borrowing. The DMO emphasized that the government’s debt service-to-revenue ratio of 73.5 percent in 2023 is high and poses a threat to debt sustainability. It called for revenue mobilization initiatives and reforms to increase tax revenue to Gross Domestic Product (GDP) ratio in line with international standards.

Moreover, the Federal Government is nearing its self-imposed debt limit of 40 percent, making it challenging to borrow extensively in the future, according to the DMO.