The government will source a total external loan of $9.3bn from this year to 2014 to develop infrastructure, particularly in the agricultural, housing, education, health and transport sectors.
Minister of Finance, Dr. Ngozi Okonjo-Iweala, said the increase consituted an amendment to the original $7.9bn proposed in the 2012-2014 Borrowing Plan the Federal Government earlier sent to the National Assembly.
The amended borrowing plan showed an increase of $1.4bn.
The country’s total external debt stood at $6.2bn as of September 30, while the domestic debt profile was N6.3tr as of the same date.
Okonjo-Iweala on Monday appeared before the House Committee on Loans/Aids/Debts along with officials of the Debt Management Office to defend the amended plan.
She explained that out of the $1.4bn, the sum of $1bn was expected from a Euro Bond the government would issue in 2013 and that another $200m African Development Bank loan would be sourced for water projects in Rivers State.
The minister said that another $100m would be sourced from a Diaspora Bond “as a way of bringing our people to put their funds in the provision of infrastructure” in the country.
The amendments also included the swapping of a $300m loan sourced from the World Bank for the power sector to the provision of housing.
The minister said, “We have to really explain how this swapping came about so that people will not accuse us of taking money for power to housing.
“The World Bank already made a provision of $600m credit guarantee for power sector.
“This money has not been utilised and it is the position of the bank that instead of asking for another $300m for the same power, the money should be applied in housing.
“When the $600m is utilised, we can think of additional funds in this regard.”
Giving a breakdown of how the entire $9.3bn would be spent, the minister said that $450m would be earmarked for erosion and flood control projects in the South-East states and Cross River state.
According to her, $200m will be used to fund the FADAMA agriculture projects in some states in the North, while $150m will be spent on educational projects in Edo State.
She stated that $234m would be spent on power projects in Zungeru and another $136m on water supply projects in Zaria.
The $500m China-Exim Bank loan for the Abuja Light Rail Project was also captured in the borrowing plan.
Members of the committee, headed by Mr. Ajani Adeyinka, however raised concerns over the implications of the proposed loans for Nigeria’s future.
Okonjo-Iweala told the lawmakers that government agreed to accept the loan offers after a thorough investigation indicated that they had “zero interest” rates, “soft terms” and a repayment period of 40 years and another 10 years of grace.
She noted that the offers came from multi-lateral agencies, which were different from “commercial” credit bodies like the Paris Club.
Okonjo-Iweala added that as a minister who helped in negotiations to get Nigeria out of the debt trap in 2005, she would not allow the country to go for loans with serious implications for the economy.
“Nigeria has one of the lowest debts to GDP ratio in the world. Greece, Japan and others have up to 80 per cent debt to GDP ratio. In Nigeria, we are still below 20 per cent, which is a very comfortable position,” she stated.
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