The Federal Government has reportedly approached the World Bank for an additional loan of $400 million to support a conditional cash transfer program aimed at mitigating the impact of petrol subsidy removal on Nigerians. This move brings the total amount borrowed from the World Bank for the cash transfer initiative to $1.2 billion, as a previous loan of $800 million had been secured for the same purpose.
President Bola Tinubu had announced the conditional cash transfer program, targeting 15 million households, in a bid to cushion the effects of the subsidy removal that led to a significant increase in living costs. The cash transfer initiative involves monthly payments of N25,000 to each of the targeted households for three months, from October to December 2023.
The government had initially secured an $800 million loan from the International Bank for Reconstruction and Development (World Bank) during the previous administration of President Muhammadu Buhari. The present administration is now seeking an additional $400 million to augment the cash transfer program.
In addition to the cash transfer, the government has approved a provisional allowance of N25,000 for junior federal workers over the next six months. However, following protests and threats of a nationwide strike by the organized labor, the government increased the provisional wage award to N35,000 for all treasury-paid federal government workers for six months.
A government official clarified that the N35,000 cash award for civil servants would be funded without a loan, and a supplementary appropriation bill might be presented to the National Assembly for this purpose. The source emphasized that borrowing was specifically for the conditional cash transfer program.
Despite ongoing borrowing activities, Nigeria has maintained its fourth position on the World Bank’s top 10 International Development Association (IDA) borrowers’ list. The country’s IDA debt stock increased from $13 billion as of June 30, 2022, to about $14.3 billion by June 30, 2023.
The Debt Management Office (DMO) recently warned about the high debt service-to-revenue ratio, indicating a threat to debt sustainability. The DMO urged the government to focus on revenue generation and explore initiatives like public-private partnerships and asset privatization to reduce reliance on borrowing.
