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.
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 N10.8 trillion ($28.35bn) budget. The central bank has said Nigeria’s balance of payments gap this year will be $14bn.
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.
Another banking source said the loan could not be approved until October.
The Federal Ministry of Finance directed queries to the World Bank. In a statement, the bank said discussions were at an advanced stage, but confirmed that it had not presented the loan to its board.
“Of particular importance are the steps the government is taking to marshal the needed fiscal resources for a pro-poor response to the crisis and undertake the reforms that will help ensure a robust recovery,” the statement said.