Nigeria is considering asking the World Bank, the African
Development Bank and other international organizations for help to plug a hole
in this year's budget created by the collapse in crude oil prices. The
government said it is looking to borrow as much as $9 billion to fund its
cash-starved economy.
The 75% plunge in crude prices to around $33 per barrel means
Nigeria is now losing money on some of the oil it pumps.
Nigeria is the
second major oil producing country, after Azerbaijan, to admit it might need emergency
financing because of low crude prices.
Nigeria,
Africa's largest economy, is also the continent's biggest oil producer. The
sector accounts for about 35% of GDP, 75% of government revenue and 90% of
export earnings.
Its currency
is plummeting, with foreign exchange dealers offering much higher rates than
the official 199 nair per dollar. The government has been burning through its
foreign currency reserves, which fell to $28 billion at the end of January from
$43 billion two years ago.
And its budget
deficit is growing fast. The government wants to invest in big infrastructure
projects and make the country less dependent on oil.
The deficit is
now expected to reach 3 trillion naira ($15 billion) in 2016, up from a
previous estimate of 2.2 trillion.
Nigeria is
also suffering from frequent power cuts and fuel shortages because it doesn't
have enough capacity to refine it own crude.
The finance
ministry denied reports that it has already asked for emergency cash, but said
it is considering a World Bank loan as one way of funding the deficit.
"The
truth is that Nigeria... has indicated an intention to borrow 1.8 trillion
naira principally for investment in capital projects to stimulate the
economy," Finance Minister Kemi Adeosun said in a statement.
Nigeria is
exploring the option of borrowing from multilateral organizations such as the
World Bank and AFDB, as well as the Export-Import Bank of China, because they
offer lower rates of interest than other lenders, she said.
Officials from
the African Development Bank visited Nigeria last week.
Nigeria is a member
of OPEC, and has been pushing for the Saudi-led oil cartel to cut
production to support prices.
OPEC decided
in 2014 to wage a price war with
low cost producers in the U.S. and elsewhere in a bid to defend market share.
Many OPEC countries are still making money at these prices but others are
losing.
Nigeria's average production costs are estimated at about $31 a barrel.
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