The African Development Bank’s (AfDB’s) board on Wednesday approved a $600 million loan for Nigeria to solve the problem budget deficit brought on the country as a result of economic recession.
A senior official of the development bank explained that the facility was the first tranche of the $1 billion budget support package expected from the bank.
The second disbursement of $400 million is dependent upon the implementation of reforms, the bank’s Nigeria country director Ousmane Dore, said.
According to Dore one of the main triggers for the release of the remaining tranche will be when the government spells out its plan for overcoming its current economic challenges.
“The economic recovery plan that the government is working on must be a package of comprehensive reforms, including even exchange rate policy, the consistency with regards to the monetary policy and structural reforms,” he said.
If it meets the bank’s reform requirements, the tranche is expected to be approved by the board early next year.
Nigeria’s economy is in recession due largely to the fall in oil prices since mid-2014 as well as militant’s attacks on energy facilities in the Niger Delta which have cut crude production by around a third since the start of the year.
The bank noted that oil generates around 70 per cent of Nigerian government revenues. The drop in prices has left Nigeria struggling to fund a record N6.06 trillion ($20 billion) 2016 budget that aims to stimulate growth by tripling capital expenditure.