The Federal Government on Tuesday unveiled its plan to take a $17 billion credit line from China-Exim Bank.
Zainab Ahmed, the Finance Minister, made the disclosure in the course of defending the resolve of the President Muhammadu Buhari-led administration to source $29.96 billion, aimed at bankrolling several critical infrastructures across Nigeria.
Ahmed revealed that Nigeria was turning to China for credit because lenders like the World Bank and the African Development bank were not enthusiastic about granting the country loan facilities during the recession.
According to the minister, the sum of $22.8 billion is outstanding after the National Assembly approved about $6 billion out of the $29.96 billion.
She informed the Senate Committee on Local and Foreign loans that the loans were being jointly sourced by the FG and a number of state governments from various lending institutions.
70 per cent of the facility amounting to $17 billion is to be obtained the China-Exim Bank while the rest would be provided by other lenders including Islamic Development Bank, Mrs Ahmed stated.
She said Nigeria’s current debt status was nothing to worry about while observing that government’s shrinking revenue was insufficient to finance projects capable of transforming the lives of Nigerians meaningfully.
In her words, “the funds ($22.8bn) will be channelled to the funding of infrastructure, which will enhance the productivity of our economy.
“Other projects are in healthcare and education. It also includes projects for the rehabilitation of the North-East geopolitical zone, which has been ravaged by insurgency.
“Others are the Mambila Hydro Power project ($4.9bn), Lagos-Kano modernisation rail project ($4.1bn), the Development Finance project loan being provided by a consortium of the World Bank and African Development Bank agencies ($1.28bn).
“Above all, the loan will help us to improve our electricity supply, reduce poverty, create jobs, ensure access to finance, agricultural productivity, guarantee food security, achieve high school enrolment, provide clean potable water, rehabilitate major roads and develop the mining industry.”
Ahmed affirmed that 70 per cent of the loan from China “is meant to make funds available to our own development institutions so that they can give out loans because access to finance has been difficult for the SMEs.”
She said “the 2016 – 2018 external borrowing plan is both for the Federal Government and the states. So, some states would be responsible for the payment of some of the loans.”
Remarking on Nigeria’s debt profile, the minister noted that the country’s current portfolio ceiling according to the FIscal Responsibility Act was 25 per cent of total debt to GDP.
She acknowledged that “the ratio for December 2018 was 19.09 per cent but it reduced to 18.9 per cent by the middle of 2019.
“The debt service to revenue ratio is however high and it provides us strong justification for us to drive our revenue.
“For 2017, the ratio was 57 per cent and 51 per cent in 2018.”
Ahmed went further to say that Nigeria’s debt level was low when set beside those of other countries like the US, the United Kingdom and Canada.
The Debt Management Office had, about three weeks ago, put Nigeria’s public debt figure at third quarter 2019 at N26.215 trillion.