The African Development Bank (AfDB) has canceled a loan to the sum of $400million to Nigeria that would have helped the country fund its budget.
The Vice-President for Power, Energy, Climate Change and Green Growth, AfDB, Amadou Hott, was quoted while speaking with Reuters on Monday as saying that the bank would instead redirect the money to specific projects in Nigeria rather than give to the country to fund its budget.
Hott said this during an interview with the prominent news outfit during a Nordic-African business conference in Oslo, Norway.
The AfDB had been in talks with Nigeria for around a year to release the second tranche of $400m of a $1bn loan to shore up its budget for 2017, as the government tried to reinvigorate the stagnant economy with heavy spending.
But Nigeria refused to meet the terms of international lenders, including the World Bank, to enact various reforms such as allowing the naira to float freely on the foreign exchange market.
Rather than loan Nigeria money to fund its budget, the AfDB is likely to take at least some of that money and “put it directly into projects,” Hott explained.
Because prices for oil, on which Nigeria’s government relies for about two-thirds of its revenues, have risen and the naira-dollar exchange rate has improved, the country is relying less than expected on external borrowing, Hott said.
In late 2016, the AfDB agreed to lend Nigeria a first tranche of $600 million out of $1 billion. But negotiations over economic reform later bogged down, blocking attempts to secure the second tranche of $400 million, sources told Reuters then.
Now, AfDB’s loans will be more targeted, Hott said.
“It’s hundreds of millions of dollars, just in one go, that we were supposed to provide in budget support, but we will move into real projects … “ he said.