Kemi Adeosun, minister of finance, says the
federal government will spend $3 billion refinancing debts from the
administration of former President Goodluck Jonathan.
She said this while featuring on an
Arise TV programme.
The minister also said the $5.5 billion
loan which President Muhammadu Buhari is seeking to get the approval of the
national assembly for, is made up of two components – refinancing of heritage
debts to the tune of $3billion and new borrowing of $2.5 billion for the 2017
budget.
“Let me explain the $5.5 billion borrowing
because there have been some misrepresentations in the media in the last few
weeks. The first component of $2.5 billion, represents new external borrowing
provided for in the 2017 Appropriation Act to part finance the deficit in that
budget.
“The borrowing will enable the country to
bridge the gap in the 2017 budget currently facing liquidity problem to finance
some capital projects.
“For the second component, we are refinancing
existing domestic debt with the US$3 billion external borrowing. This is purely
a portfolio restructuring activity that will not result in any increase in the
public debt.”
The minister said it is puzzling that
Nigeria’s debt rose from N7.9 trillion in June 2013 to N12.1 trillion in June
2015, despite the fact that only 10% was allocated to capital expenditure when
oil price exceeded $120 per barrel.
“Under this dispensation, we are not
borrowing to pay salaries. If all we do is to pay salaries, we cannot grow the
economy. This administration is also assiduously working to return Nigeria to a
stable economic footing.
“In light of this, the government adopted an
expansionary fiscal policy with an enlarged budget that will be funded in the
short term, by borrowing.”
She said the $5.5 billion foreign borrowing
was consistent with Nigeria’s debt management dtrategy, which main objective is
to increase external financing with a view to rebalancing the public debt
portfolio in favour of long-term external financing.
“Nigeria’s debt to gross domestic product
(GDP) currently stands at 17.76% and compares favourably to all its peers. The
debt to GDP ratio for Ghana is 67.5%, Egypt is 92.3%, South Africa (52%),
Germany (68.3%) and United Kingdom (89.3%),” she said.
“Nigeria’s debt to GDP ratio is still within
a reasonable threshold. This administration will continue to pursue a prudent
debt strategy that is tied to gross capital formation. This will be attained by
driving capital expenditure in our ailing infrastructure which will in turn,
unlock productivity and create the much-needed jobs and growth.”
Source: The Cable
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