FG budgets $3bn crude repayment loan for naira stabilisation

The Federal Government has said the $3 billion crude oil repayment loan it recently secured with the African Export-Import Bank (Afreximbank) would be deployed to stabilise the naira.

This was disclosed during the meeting of the National Economic Council (NEC) on Thursday, where it was affirmed that the $3 billion emergency loan for crude oil was to augment the ongoing fiscal and monetary policy reforms of the Central Bank of Nigeria (CBN) aimed at stabilising the exchange rate market.

The deal with Afreximbank has further given more positives as the group has recently opened talks with some oil traders for the execution of the $3 billion emergency loan to Nigeria.

According to sources who spoke with Reuters, Afreximbank is currently crafting suitable terms to offer to the interested trading houses.

The source further hinted that the sharp spike in the price of crude oil would help drive interest in the deal, adding that traders who invested cash would be repaid in physical cargoes of oil.

The deal was stuck amid the FG’s failure to meet its daily oil production target following a 13.6% drop in daily crude oil production in the month of July, a development which created a serious dollar shortfall from crude oil export.

The agreement which was was jointly signed by the Nigerian government and the Afreximbank group at the bank’s headquarters in Cairo, Egypt will see Afreximbank sourcing for oil traders’ interest in funding the oil-backed loan to the NNPC Limited.

While addressing journalists after the 136th NEC meeting, the Nasarawa State Governor, Abdullahi Sule, said, “So, we are very confident and we still believe very strongly that with the plan that will come out and with all these items that have been listed on the improvement of revenue, the $3bn shall be useful to us down the line.”

When probed further on when the intervention would commence, the governor said time should be given to the new CBN management to settle down as they would need to work out the modalities for the stabilisation process as it would definitely take a while.