President Goodluck Jonathan has asked federal lawmakers to endorse his bid for a fresh $8 billion foreign credit lifeline to finance some “pipeline projects”, under his administration’s transformation agenda.
The move is sure to raise Nigeria’s total debt stock to a new high in almost a decade since the country managed to exit the Paris Club debt overhang in 2004.
It was gathered that the quest for the facility was given fillip in the wake of government’s recent failed attempt to remove subsidy on petrol, which it hoped to claw in about N1.3trillion in savings to help fund some key projects under
The Debt Management Office (DMO) puts the country’s current total debt profile as at September last year at about $40billion (about N6.3trillion), consisting external debt of $5.6 billion (about N876.4billion) and domestic debt of $34.4 billion (about N5.4trillion).
A memo to the Senate and the House of Representatives indicates that between 2012 and 2014, government plans to obtain up to about $7.91 billion in low interest credit facilities from some international finance institutions, including the World Bank, African Development Bank (ADB), Islamic Development Bank (IDB), Exim Bank of China as well as Indian credit lines.
In the alternative, government would explore the possibility of drawing about $2.64 billion annually from the lenders.
In his 2012 Budget speech, President Jonathan said his administration planned to dedicate a sizable chunk of the provision to finance key sectors of the economy, including security, infrastructure development (including power), agriculture, manufacturing, housing and construction, entertainment, education, health and information technology to boost job-creation and foster economic growth.
Approval from both chambers cannot be earlier than two weeks, as such requests in the past usually entailed adjustments to the 2012 budget fundamentals.
Finance Minister, Ngozi Okonjo-Iweala, had notified the lawmakers during her appearance recently that to fully implement the 2012 budget, sourcing for funds externally would be inevitable, though she assured that such loans would be done at a “manageable level”.
The country’s debt profile has seen a rapid upsurge since Mr. Jonathan assumed office in 2010, exposing the president to a swirl of attacks for policies that have depleted savings and increased borrowing, with little or no significant achievement to show for it.
Critics have said such hefty borrowings should finance key infrastructural projects such as power projects, seaport development, interstate road networks, railway lines as well as new refineries. But the administration has failed to point to any despite drawing down the nation’s foreign reserves from $600 billion to $500million in months, and excess crude account.
The president urged the lawmakers to consider approving the request along with the list of pipeline projects included in the country’s Medium Term (2012-2014) external borrowing plan, most of which, he said, were nearing completion.
Despite his assurances in his 2012 budget speech that his administration would not accumulate fresh debts that would “become a new burden on our children”, it was gathered that he was emboldened by assurances from the DMO that Nigerians have nothing to worry about the country’s debt profile, which reflects a debt-to-Gross Domestic Product (GDP) ratio of 19.6 per cent.