The International Monetary Fund, African Development Bank and other related agencies have rejected the request for loan by the Federal Government.
However, the People’s Republic of China has agreed to provide $17 billion loan to the country.
President Muhammadu Buhari had proposed to the National Assembly a loan request of $29.8 billion.
But the Federal Government has already a $6 billion loan under the eight Senate, leaving an outstanding of $22.718 billion.
However, the Minister of Finance, Budget and National Planning, Zainab Ahmed, who appeared to justify the loan request before the Senate Committee on Foreign Loans and Debt, explained that $17 billion out of the $22.718 billion being sourced from different international creditors is to be given by China Exim Bank alone, which represents 70 per cent of the entire loan requests.
Ahmed told the Panel that it was only the Chinese Government that was ready to offer the loan to Nigeria, adding that other international creditors like the World Bank and African Development Bank approached for the loan were not as cooperative.
She said: “Most of our rail projects are being funded by China Exim Bank on 15 to 30 years repayment plans and five to seven years moratorium, which we are very comfortable with.”
She explained that the loans, if approved, will not be spent on consumption, but strictly on what they were meant for like productivity of the Nation’s economy, North East rehabilitation, completion of the $4.9 billion Mambila Power Project and extension of Nigeria Railway Network.
She added that the loans, if approved, will not in any way sink Nigeria into unserviceable indebtedness as the country is yet to exceed the 25 per cent total debts to GDP, which is even lower to 55 per cent recommended by the World Bank.
Ahmed said: “If the projected loan is approved, our rate of debt servicing will only move from 18 per cent of total debt to GDP to 20.94 per cent.”
The Minister also stressed that without the loans, the problem of infrastructural deficit stifling the growth of the nation’s economy and development generally will remain unattended to as revenue generation cannot in anyway tackle the problem.
She said: “The surest way out for the country as far as infrastructural deficit are concerned is the long term low cost loans being sought for from different international creditors since revenues cannot in anyway address the problem.”
Speaking after presentations, the Committee Chairman, Clifford Ordia, said up to eight agencies are yet to appear before the Committee, adding that anybody who wants the loan should be ready at any time to defend it.
Ordia said the the ministries that are yet to appear are Niger Delta, Education, Water Resources, Humanitarian, Health, Communication and Power, blaming the delay for the consideration of loan to the Ministries.
In his opening remarks, he said: Permit me at this point to correct the erroneous perception that the legislature has a predetermined position or that it has a phobia for borrowing.
“Nothing could be further from the truth.
:Parliament is indeed aware that borrowing is an essential not unavoidable tool in a nation’s public finance architecture and is required for rapid and sustainable development.
“However, as an arm of government (and echoed by the public and other informed stakeholders alike), it is that borrowing should only be resorted to on the following grounds: one, where it will be useful to unlock potential for job and wealth creations for Nigerians; two, must be obtained under the beneficial terms and conditions in accordance with the law; and three, must be sustainable.”
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