The Finance Minister Zainab Ahmed revealed these plans on Friday. She was attending the inauguration of the Federal Steering Committees of the Nigeria COVID-19 Action Recovery and Economic Stimulus (N-CARES) program in Abuja.
Nigeria, the largest producer of oil in the continent, is faced with the threat of a recession due to the collapse of global oil prices. With lower oil demand set to persist till 2021, the country needs an economic stimulus to stabilize the country.
The World Bank had warned in June that the pandemic could push 5 million people in Nigeria into poverty.
“Nigeria cannot afford to remain in recession. The survival of a population of over 200 million is germane to all we do,” Ahmed told the attendees at the inauguration.
“The consequences will be too high if we ignore the root cause of rising civil unrest in our country. We must, therefore, fashion out ways of ensuring that post-Covid-19 is not injurious to the Nigerian people and the economy.”
The new loan is announced amid concerns that the country’s debt profile is already too high and could burden the finances during repayment. However, the Debt Management Office maintains that the country’s debt to GDP is sustainable.
Nigeria is also in discussions with the World Bank for a budget support loan of $1.5 billion whose approval has been delayed due to concerns over desired reforms. The World Bank had called for a more flexible and unified exchange rate, removal of fuel subsidies, and an increase in electricity tariffs. Officials at the World Bank believe that the Federal Government is not serious about its commitments.
The $750million loan will help states to stimulate the local economy and support vulnerable households’ consumption.