Minister of Finance, Budget and National Planning, Zainab Ahmed on Tuesday clarified why the Federal Government chose to move toward the China-Exim Bank for a $17bn credit demand.
As per the account serve, the World Bank, the African Development Bank, and other loaning establishments were not indicating a lot of premium when Nigeria moved toward them during downturn.
Zainab Ahmed, expressed this in the Senate while safeguarding the choice of the system of President Muhammadu Buhari to get $29.96bn credit to finance basic foundation the nation over.
She clarified that the eighth National Assembly had endorsed about $6bn for the Federal Government out of the $29.96bn advance, leaving a parity of $22.8bn.
Ahmed told the Senate Committee on Local and Foreign credits that the Federal Government and some state governments were together mentioning the advances from different loaning foundations.
She said 70 percent of the credit, which is about $17bn, would originate from the China-Exim Bank while others would be sourced from other loaning foundations, for example, the Islamic Development Bank.
The pastor kept up that the nation had no issue with its present obligation profile however noticed that its lessening income couldn’t support the different tasks that were to meaningfully affect the lives of Nigerians.
She said,
“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 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.”
On why the country is seeking 70 percent of the foreign loan from China, the minister said,
“it 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.”
On the debt profile of the country, the minister 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.”
On the sustainability of the nation’s debt portfolio, the minister said Nigeria’s current portfolio ceiling as set by the Fiscal Responsibility Act was 25 percent of total debt to GDP.
The minister said the nation’s debt level was low compared to other countries like the USA, the United Kingdom, and Canada.
