Nigeria will receive a $1 billion concessional loan from the African Development Bank (AfDB) to support budget financing and improve foreign exchange supply, Finance Minister Olawale Edun said on Monday.
The ADB loan will carry an interest rate of 4.2% for 25 years with an eight-year moratorium, Edun told reporters after a cabinet meeting in the capital, Abuja.
The ADB’s $1 billion loan is a budgetary support fund for ongoing economic reforms. It is intended to support government programs… in the energy sector, social inclusion and fiscal policy reforms as a global sectoral policy initiative.
The cabinet approved a 2 trillion naira cap to refinance expensive government debts and save on debt servicing costs, Edun said. Nigeria has spent most of its revenue on debt servicing due to low tax collection.
“The vision is that there will be an opportunity to save about 50 billion naira or more on debt service over time by paying back expensive debt and refinancing it with cheaper financing,” the Finance Minister said.
President Bola Tinubu embarked on Nigeria’s boldest reforms in decades, eliminating a popular but costly gasoline subsidy and a multiple exchange rate system that kept the currency artificially strong, restricting trade and growth.
Tinubu is trying to rebuild Nigeria’s economy and attract investors to revive growth, which has been sluggish for almost a decade, tackle a high debt burden and reduce double-digit inflation.