Nigeria to save N168 billion annually from proposed $5.5 billion loan – Adeosun

WBG-IMF CONFERENCE -1
Finance Minister, Kemi Adeosun and Central Bank of Nigeria governor, Godwin Emefiele

The proposed $3 billion (about N1 trillion) debt to be borrowed by the federal government to refinance an existing loan would save the country about N91.65 billion per annum, Minister of Finance, Kemi Adeosun, said on Thursday.

The minister explained recently that the debt refinancing plan, which was a major component of the total $5.5 billion loan package being considered by the government, was to help take care of the legal debts inherited from the immediate past Goodluck Jonathan administration.

Speaking on the possible benefits of the revenue and debt management strategy on Thursday, the minister said the strategy would involve converting short term Treasury Bills into longer tenured international debt at single digits interest rates.

According to a statement from her office, she said about N76.375 billion would be saved every year from borrowing the other $2.5 billion component of the loan; making a total annual saving of about N168 billion from the $5.5 billion loan.

“The proposed refinancing of $3 billion worth of short term Treasury Bills into longer tenured international debt is expected to save N91.65 billion per annum,” the minister added.

Other benefits of the strategy, she said, include improvement in the country’s foreign reserves through increased dollar inflow and reduction in domestic debt demand; as well as lengthening the maturity profile of the debt and reducing the rollover risk.

“This will significantly reduce the crowding-out of the private sector and support the aspirations of the monetary authorities to bring down interest rates in the country,” the minister explained.

She said she was confident the revenue and debt management strategy would mitigate the country’s debt service risks and fast-track the country’s development.

The government does not see a significant devaluation risk as the implementation of the Economic Recovery Growth Plan, ERGP, over the medium term, is such that the Naira is expected to strengthen, she explained

Welcoming the advice by the country’s international development partners, including the International Monetary Fund, IMF, Mrs. Adeosun said mobilising revenue to improve the debt service to revenue ratio was a key element of the economic reform strategy.

This, she explained, was being undertaken through a number of initiatives including the plugging of leakages and the deployment of technology revenue management systems.

She specifically cited the example of the health pay scheme, a pilot cashless revenue project in the health sector, which recorded material increases in revenue earnings.

She also spoke about the benefits of the ongoing Voluntary Assets and Income Declaration Scheme, VAIDS, initiative by the Federal Inland Revenue Service, FIRS, expected to equally positively impact the level of tax collections.

“The difference in our economic strategy is that we are changing the mix of revenue sources available to government from the traditional oil or debt to a combination of oil, debt and domestic revenue,” Mrs. Adeosun said,

In the short term, she said, the strategy would enable the debt service to revenue ratio to improve.

In addition, the minister said government’s refinancing of its inherited debt portfolio would lead to significant benefits, particularly through a reduction in cost of funds.

While government has been borrowing from domestic sources at about 16 per cent interest rate, the country would be able to obtain the loans at a rate not exceeding 6 per cent per annum.


DOWNLOAD THE PREMIUM TIMES MOBILE APP

Now available on

  Premium Times Android mobile applicationPremium Times iOS mobile applicationPremium Times blackberry mobile applicationPremium Times windows mobile application

TEXT AD:DIABETES Is CURABLE! Don't Let It Threaten You! To NORMALIZE Your Blood Sugar In 21Days For Life, Click Here!!!.


All rights reserved. This material and any other material on this platform may not be reproduced, published, broadcast, written or distributed in full or in part, without written permission from PREMIUM TIMES.


  • APC Pension Heist Promoters

    The look on emefile’s face says it all…HOGWASH!
    Buhahaha!!!
    Oh..I see they mentioned Jonathan’s name again. Hmm..strange they havnt thought of pining the maina sh*t on Jonathan. They could have just said the HOS informed Jona of the reinstatement. They’ve told worse tales..so that could fly for their bubu worshippers.
    CLOWNS!!!!!

    Messi chanji

    • victoria

      Borrowing money for Looters

  • APC pension Heist promoters

    Hahaha! Same way sai baba dribbled the likes of Kay soyemi/Julius, tundeFart/tunsj/man enough, amazing2012, Maria, wahala, Rommel and a host of other slow thinkers. Now they have been sidelined due to injury till 2019.
    It’s well oo….

    Messi chanji

  • utolason

    You aren’t making sense. Read carefully what she is saying and if you understand the financial management logic of it you will not fail to agree with her. Take for example, you owe Bank A N100 milliom at 21% interest rate and Bank B offers to borrow you N100 million to pay off the loan at 10% interest rate, what would you do? Kemi is one of the best ministers in Buhari cabinet.

    • Sab

      Please withdraw that statement. Best minister in 26+6=24 abi? If she is the best or one of the best then it means there is no single good one amongst them. A minister who says reason for high cost of rice was because Nigerians eat too much of rice should he be worth that post?

      • utolason

        There you go again! “Nigerians eat too much rice” as a reason for the increase in price simply means “the greater the demand the higher the price”, which you ought to know from your study of elementary economics or basic commonsense.

        • Hassan Lawal

          abi o?..simple!

      • pheliciti

        You obviously didn’t study secondary school economics.

    • Kay Obodo

      Where is the recovered loot?

  • forestgee

    Con or confused faces! Difficult to trust or believe this government….saying one thing and doing another

  • Tunde

    Yep! Only the ” let the corrupt money flow in the economy” people that will question this logic! Carry go!

  • Otile

    Kalamity Kemi is now the Federal Minister of Debts. She is always very comfortable when she talks about good debts. The very first week Buhari took power he headed straight to Washington to take a loan of over $2.1 billion at an undisclosed interest rate. Two weeks after that he went to EU to secure another loan of $2 billion at what they called fabulous interest rate, then they went to China and other places to secure more staggering debts. It came to a point no civilized nation would lend them money again. Those countries now sell them arms and ammunition at usury rates instead of advancing them cash. Kalamity Kemi will never mention any of these loans rather she dishonestly blames Jonathan. Kemi, Nigerians are not all fóóls, they understand your deceptions. Nonsense.

    • Chimezie Bob

      My friend, what do you know about economics? The Senate should hasten the approval of this loan to get the country out of heavy debt servicing burden. Nigeria debt profile is still very low compared with other African countries, Infact we are very ok. We should be sensible in our criticism and when we don’t understand issues, it is better to keep quiet. There is no country in this world that is not borrowing and there is no way we can develop without borrowing.

  • Izedomi Ohirein

    Paying off local borrowing will make money available to private investors.
    Nigeria Banks specialise in buying high interest government bonds,and lend short term to toothpicks, fake drugs and expired food importers rather than lend to Nigerian entrepreneurs.

  • Tommy Soto

    The Honorable Minister Adeosun is divine blessing for the nation. Roll with her boys and girls. She is doing the historic work of putting the county’s financial house in order.
    Her predecessor received all kinds of accolades from the colonial master countries while mass looting was occurring. Think about that for a minute or two.

    Small Gatehouse Boys, do your best! 🙂

  • STAND OUT

    Carry on Mrs Finance Minister. may God bless and help you.

  • dele20

    Jonathan did much harm to Nigeria