Business
Buhari seeks $2Bn loan from China
In the face of dwindling capacity to meet local and international obligations, the Buhari-led administration is reported to have reached out to China for a $2 billion loan to cushion crushing economic realities.
A leading Chinese news platform reports that an advance team headed by the finance minister is expected to travel to negotiate the facility while President Buhari would travel to China to sign the loan in March. President Muhamadu Buhari recently presented an ambitious budget to Nigeria’s parliament. At 30 Billion dollars, it is the highest Budget proposal in Nigeria’s history.
Analysts think Buhari’s administration is attempting to spend its way out of recession by investing a huge chunk of the budget in infrastructure but he doesn’t have access to funds for that. The deficit stands at $5 billion for now but it could rise up to $15 as Buhari’s administration plans to spend billions on infrastructure and uplifting social service.
Nigeria’s economy has been contracting consistently for more than a year – Rapidly falling oil prices taking a toll on the economy. Crude oil accounts for 90% of the country’s exports and 70% of its earnings.
Read also: MTN Nigeria withdraws court case, pays NCC N50b
Last year Nigeria barely escaped a recession – experiencing double negative growth in succession. It is currently grappling with a shortage of foreign currency- with the Naira trading at 334 to a dollar in the parallel market although the central bank has kept the official exchange rate at 197.
The fall in crude prices has had a debilitating effect on the economy here, the country relies 90% on oil for its export revenue-As a result Its savings have stagnated and now the country is on a path to increasing debt levels with limited ability to pay back-at least in the short run.
But Buhari’s administration believes investment in the country’s infrastructure could make the country more attractive to foreign investors and overtime wean the economy from over dependence on oil revenue.
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