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.
Its Nigeria Country Director, Shubham Chaudhuri, said: “We were hoping to present to our board by late July or latest early August, because the government will need the finance. The immediate challenge is a fiscal one: How does the government marshal the fiscal resources to keep basic government functions going?”
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Finance Minister, Zainab Ahmed said the economy could shrink by as much as 8.9 per cent this year. The World Bank expects Nigeria’s economy to shrink by between 3.2per cent and eight per cent this year, 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 warned.
World Bank loans, such as 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,” Hernandez said, adding that it would help the recovery and boost investor confidence.