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Why World Bank loan is good for Nigeria – DMO

THE Debt Management Office (DMO) says Nigeria’s indebtedness to the World Bank, which grew from 6.29 billion dollars in 2015 to 13.46 billion dollars in 2022 is a positive development.

In a clarification statement issued yesterday, the office argued that the loans are issued at concessionary rates with long-term repayments plan.

Prior to this DMO’s clarification statement, there are concerns over controversy about World Bank loans to the country in recent times, as Nigeria prepares for a post-petroleum subsidy era.

For instance, at the just concluded Spring meetings held at Washington DC-United States, some Civil Liberty Organisations-CLO urged the World Bank to stop loan issuance to the Federal Government.This was in particular reference to the proposed $800 million facility that focused on palliatives for vulnerable Nigerians in a post subsidy era.

The palliatives are meant for over 50 million Nigerians ahead of June 2023.

The DMO stressed that loans from the World Bank come from the International Development Association (IDA) and the International Bank for Reconstruction and Development (IBRD) are issued at concessionary repayment rates.

“IDA loans are concessional, that is, they allow low charges and are for very long tenors in some cases, exceeding 30 years.

“These are the types of loans required to fund development in countries such as Nigeria.

“By accessing IDA funding, the government is actively reducing debt service costs, since non-concessional funding are usually more expensive.

“Indeed, it will be inefficient for Nigeria to borrow from commercial sources when concessional funding sources such as ODA is available,” the DMO said.

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