Shubham Chaudhuri, the Country Director World Bank for Nigeria, said Africa’s most populous nation has no choice but to borrow to finance its 2023 budget deficit.
Chaudhuri disclosed this during an interview with Channels Television on Saturday, monitored by newsmen.
The World Bank chief was reacting to its $800 million concessionary loan offered to Nigeria.
There have been heavy criticisms from Nigerians and stakeholders concerning the $800 million loan from the world bank amid the country’s rising debt profile hovering around N77 trillion with the addition of the Central Bank of Nigeria’s Ways and Means loan.
However, Chaudhuri explained that Nigeria has no alternative but to borrow to finance its N10.7 trillion budget deficit.
He noted that whether fuel subsidy is removed or not, the country still must approach lenders to fund its deficits.
According to him, the World Bank’s $800 million is the most affordable for Nigeria now compared to loans from the domestic market, Eurobond or others.
“Everyone needs to be clear on the fact that whether Nigeria receive the $800 million world bank loan or not, 2023 Nigeria’s budget is already having a projected deficit of N10.7 trillion, that is if the fuel subsidies are removed by June but if not, the deficit would be N12 trillion or more. The deficits have to be financed; the fact is that Nigeria would be taking more debts to finance its budget deficits. Unfortunately, with revenue still being low as they are, Nigeria has no choice.
“The question is how do you finance the deficits? It will reach N10.7 trillion or N12 trillion; our financing is available but other choices exist. You can borrow from the Eurobond market, the domestic market or the Central Bank(Which had happened in the past with the ways and means of financing); all of those sources are quite expensive”, he said.
President Muhammadu Buhari last week wrote to the National Assembly seeking approval of the World Bank’s $800 million loan.
Earlier, Buhari approved a 2023 budget of N20.51 trillion with a deficit of N10.78 trillion.
To reduce the budget deficit, the Minister of Finance, Budget and National Planning, Zainab Ahmed, had hinted at removing fuel subsidies by the end of June. However, the Ministry later backtracked on the Fuel subsidies removal plan.
