Nigeria is in danger of accumulating more debt if the $2.3billion loan from World Bank and Chinese EXIM Bank to fund key infrastruture projects in the 2017 budget.sails through as expected; currently the country is owing an estimated debt of over $57.3 billion.
Finance Minister, Mrs.Kemi Adeosun, who spoke to CNBC Africa said Nigeria wants to borrow at least $1 billion from the World Bank and to sign within months another $1.3 billion loan from China to fund railway projects.
The new loan agreements are coming on the heels of revelations by the Director General of the Debt Management Office (DMO) Abraham Nwankwo last week that the nation’s foreign and domestic debts currently stand at about $57.39billion (about N17trillion).
But observers said the economy needs to plug a gap in its record N7.3 trillion naira ($23.17 billion) 2017 budget, where government intends to spend more on capital projects to ease pains of the current recession.
The government has been in talks with the World Bank for over a year and wants to finalise discussions this month by presenting a reform proposal necessary for a loan drawdown according to officials.
“We expected to borrow at least $1 billion,” Adeosun told CNBC when asked about the talks with the Washington-based bank.
“There is also some possibility of doing sector specific interventions in the power sector, they are working very closely with us on power,” she added, Nigeria had initially promised to submit an economic plan to the World Bank by the end of December but failed to do as planned leading to delay in the approval of the loan application at the World Bank.
Adeosun also said Nigeria had been offered by China’s state Export-Import Bank (Exim) a $1.3 billion loan to fund railway projects, even as she noted that government will also present a reform proposal to the African Development Bank to release a second tranche of $ 1billion loan approval worth $400 million.
The AfDB had last year paid out a first tranche of $600 million, but has held back the balance pending the implementation of reforms by the government. African Development Bank, boss, Akinwumi Adesina, a former Minister of Agriculture in Nigeria, had criticised hard currency curbs hitting investment.
On Monday, the Central Bank of Nigeria took steps towards reforms by devaluing the naira for retail customers despite earlier objection by President Muhammadu Buhari to further a devaluation of the Naira.
Adeosun also said the government wanted to harmonise policies with the central bank and that non-oil revenues were improving, with giving details.
She also said there was no need for a loan from the International Monetary Fund (IMF). “The IMF is really a lender of last resort when you have balance of payments problem. Nigeria doesn’t have balance of payments problems per se, it has a fiscal problem.”
“Interestingly our whistle-blowing programme (to track down graft) actually picks up tips that bankers were being instructed to rename accounts when they knew that the money belongs to the federal government.” She did not name the banks.