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Economic Council Confirms $3B Loan-for-Crude to Support Naira

The National Economic Council (NEC) has confirmed that the $3 billion emergency loan-for-crude oil, secured by the Federal Government in August, will be deployed to stabilize the Nigerian naira, which has been experiencing fluctuations in the Investors & Exporters’ window and a deteriorating value in the parallel market, reaching N1000/$ earlier this month.

Nasarawa State Governor, Abdullahi Sule, addressed State House correspondents after the 136th NEC meeting held at the Aso Rock Presidential Villa in Abuja, expressing confidence that the loan would be useful in stabilizing the naira. He stated, “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 $3 billion shall be useful to us down the line.”

The Nigerian National Petroleum Company Limited had announced on August 16, 2023, that it had secured an emergency $3 billion crude repayment loan from Afrexim Bank. The loan’s purpose was to relieve pressure on the naira and enable the settlement of taxes and royalties in advance. Additionally, it would provide the Federal Government with the necessary dollar liquidity to stabilize the naira with limited risk.

Despite the loan, the naira continued to fluctuate in the Investors & Exporters’ window and worsened in the parallel market, briefly reaching N1000/$. However, it showed signs of recovery after President Bola Tinubu nominated Olayemi Cardoso as the Central Bank of Nigeria (CBN) governor. The naira strengthened against the dollar in the black market, closing at N990/$1.

When asked about the timeline for the intervention and the need for a supplementary budget, Governor Sule explained that the new CBN governor was in the process of formulating plans, and it would take some time to work out the modalities for naira stabilization. He emphasized that taking the loan was one thing, while planning the process of stabilization was another, which would require time.

Regarding a supplementary budget, Governor Sule mentioned that it would be a response to the current situation, but he wasn’t certain if there was an immediate need for one. So far, no supplementary budget requests had been presented to NEC.

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