The decision on a $1.5 billion loan to support Nigeria as it fights the novel Coronavirus is expected to be made by the World Bank in late July according to the Bank’s country director in an interview with an international news agency Friday.
According to the World Bank’s Country Representative in Nigeria, the World Bank is working on packages that could provide more than $3 billion to Africa’s largest economy, which is facing what the lender says may be its greatest fiscal crisis in 40 years, set off by the Coronavirus pandemic and resulting oil price crash.
“We were hoping to present to our board by late July or latest early August, because the government will need the finance,” Shubham Chaudhuri, its Nigeria country director, told Reuters.
“The immediate challenge is a fiscal one: How does the government marshal the fiscal resources to keep basic government functions going?” Chaudhuri said.
On Thursday, Nigeria’s Finance Minister, Zainab Ahmed said the economy could shrink as much as 8.9% in 2020.
The World Bank expects Nigeria’s economy to shrink by between 3.2% and 8% in 2020, and government oil revenues could fall by a third or possibly more than half, said Chaudhuri.
The Bank’s lead economist on Nigeria, Marco Hernandez, said even if the outbreak were contained, the situation was “unprecedented, shocking.”
Nigeria’s 2016 recession sent 13 million people into unemployment; this crisis might be “much more pronounced,” Hernandez said.
World Bank loans like the $1.5 billion often have conditions attached to them – reforms that governments must enact to secure the money.
Chaudhuri and Hernandez declined to comment on any conditions for the loan, including contentious subsidies for fuel, electricity and propping up the naira currency that cost Nigeria billions of dollars a year.
“We have been recommending a move towards a unified exchange rate and a more flexible exchange rate for some time,” said Hernandez, adding that it would help the recovery and boost investor confidence.