… Bank says country may enter worse fiscal crisis in 40 years
The World Bank is unlikely to approve a much-needed $1.5 billion for Nigeria in August as planned due to concerns over desired reforms, three sources familiar with the talks told Reuters.
The World Bank had hinted that it Oludare be pleased with a flexible exchange regime, removal of fuel subsidies and electricity tariff hike. Analysts said, the situation is no different from operation tighten your belt of the late 1980s.
A delay in financing from multilateral lenders could leave Africa’s biggest economy and top oil producer, battered by low crude prices, unable to fully finance a record 10.8 trillion naira ($28.35 billion) budget. The central bank has said Nigeria’s balance of payments gap this year will be $14 billion.
The World Bank, which has said Nigeria could be heading toward its greatest fiscal crisis in 40 years, had aimed to bring the loan to its board for approval this month, but the sources said negotiations over what Nigeria will do to secure it were incomplete.
“They are not convinced about the reforms,” a source close to the government said. All three sources declined to be named due to the sensitivity of the negotiations. The source added that the currency was the core issue.
World Bank loans are often contingent upon reforms. It has not outlined any demands, but said previously that it was “recommending” a more unified, flexible exchange rate. Fuel subsidies and electricity tariffs are also being discussed.
