₦airaland Forum

The Federal Government, in a bid to cushion the impact of oil price drop on the nation’s economy, is seeking external loans worth $5.7bn (N2.97tn) from its development partners to finance infrastructure projects contained in the 2015 budget.

The development partners, from whom the loan will be sourced are the World Bank, African Development Bank, Islamic Development Bank and China Export-Import Bank.

The borrowing plan was confirmed by the Minister of Finance, Dr. Ngozi Okonjo-Iweala, in a 28-page document entitled, ‘The overview of the 2015 budget proposal’, a copy of which was obtained by our correspondent in Abuja on Wednesday.

According to the document, the debt service to revenue ratio will increase from 19 per cent in 2014 to 22 per cent in the 2015 budget.

The 2015 budget, which was submitted to both chambers of the National Assembly by the Finance minister, had an oil production target of 2.27 million barrels per day, with a benchmark price of $65 per barrel; and an exchange rate of N165 to a dollar.

The fiscal document is also targeting a projected aggregate revenue of N3.602tn made up of N1.918tn oil revenue and non-oil revenue of N1.684tn.

This, according to analysis, will imply a ratio of 53 per cent oil revenue to 47 per cent non-oil revenue.

The budget also projects a Gross Domestic Product growth rate of 5.5 per cent, with non-oil revenue (including non-Federation Account funds) of N1.68tn; fiscal deficit of N755bn (or 0.79 per cent of GDP); and domestic borrowing of N570bn, down from N571.9bn in 2014.

The 2015 budget proposal has a N4.358tn expenditure figure made up of N412bn for statutory transfers, N943bn for Debt Service, N2.61tn for recurrent expenditure (non-debt) and N634bn for capital expenditure (inclusive of the Subsidy Reinvestment and Empowerment Programme).

While the recurrent vote is 85.8 per cent of aggregate budget, the capital expenditure is just 14.2 per cent of the aggregate spending, inclusive of the SURE-P.

But, Okonjo-Iweala in her analysis as contained in the document, explained that as a result of the massive drop in capital spending, the government had decided to augment capital expenditure with external long-term concessional borrowings for infrastructure projects.

She stated that the sum of $100m (N16.8bn) would be sourced from the World Bank for Clean Energy Technology project; $800m (N135.4bn) would be obtained from the African Development Bank and the Islamic Development Bank for the East-West Road project, while $4.8bn N806.4bn) would be borrowed for the Mambila Hydro Electric Power Project from China Exim Bank.

In addition, the minister stated that the Federal Government had received an invitation from the Chinese government to negotiate a credit of about $12bn for the coastal rail project to be given in six tranches over a six-year period.

She said, “Including debt service and statutory transfers, aggregate recurrent expenditure amounts to N3.971tn or 85.8 per cent of aggregate budget (inclusive of SURE-P).

“This leaves capital expenditure at 14.2 per cent of the aggregate budget (inclusive of SURE-P). Because of this, government has decided that certain expenditures must take priority and some MDAs may not get any allocation for capital projects.

“This is temporary but I must mention here that this capital budget of 14 per cent will be augmented with external long-term concessional borrowings for infrastructure projects such as $100m from the World Bank for Clean Energy Technology project; $800m for the East-West Road from the African Development Bank and the Islamic Development Bank; and $4.8bn for the Mambila Hydro Electric Power Project from China Exim Bank.

“The Chinese have also invited us to negotiate a credit of about $12bn for the coastal rail project to be given in six tranches over a six-year period.”

As of the end of September 2014, Nigeria’s overall public debt stock stood at $69.6bn or about 13 per cent of the Gross Domestic Product.

The debt stock is made up of external debt of $9.5bn and domestic component of $60.1bn.

But while the debt stock is worrisome, the minister recalled that the increase in the domestic debt stock from N200bn in 2007 to about N1.36tn in 2010 was due to the 53.7 per cent rise in the 2010 wage bill for all categories of federal employees.

http://www.punchng.com/business/business-economy/oil-slump-fg-may-borrow-from-wbank-others/

OAUTemitayo:
I don die.
This guy will ruin this country if care is not taken.
Where is the missing 10 billion dollars

lofty900:
the mab has already ruined the country. The 1 trillion dollars they borrowed 2 fight boko boyz is not enough and NW they want to borrow more. Tufiakwa. Vote GMB 4 change

egift:
Let join hands and vote out Jonathan before use the cloth on our body to collect loan

GMB all the way!

egift:
Correction: $1,000,000,000 - One billion Dollars.

Please kick out Jonathan before he start using our family members to collect loans

OAUTemitayo:
I don die.
This guy will ruin this country if care is not taken.
Where is the missing 10 billion dollars

tit:
They should borrow more.
Fashola borrow more than ten times this amount.

lofty900:
I don't think its one billion dollars. The senate fought and deliberated 4 weeks b4 approving. It 1 trillion ooooo

The development partners, from whom the loan
will be sourced are the World Bank, African
Development Bank, Islamic Development Bank
and China Export-Import Bank.

Tolexander:
the hypocrites won't see the boldend and shout islamising the nation!
Goodluck Jonathan's destiny is to bankrupt Nigeria- Tunde Bakare.

Martins301:
This is one reason Nigeria is still a member of OIC. It gives them a leeway to obtain loans from Int'l Islamic banks. This is not wrong if the funds are judiciously used for the development of the country. Instead the loans are often used to support and sponsor STOMACH INFRASTURAL PROJECTS. GEJ should go back to his home town abeg.

dridowu:
May God guide and protect Nigeria

lofty900:
the man has already ruined the country. The 1 trillion dollars they borrowed 2 fight boko boyz is not enough and NW they want to borrow more. Tufiakwa. Vote GMB 4 change

AAlozie:
Lord Jesus, please bless my hustle. I seriously want to leave this country for a more saner one

Adminisher:
He has ruined it already. The Nigerian spending ratio is established as 80:20 recurrent : capital.
So this money is not for building bridges or'm infrastructure. 80% of this money is to pay Senator salaries, buy petrol/diesel for the military in the north east and operate presidential fleet jets this year.
It is not 'HAWKS' that are going to vote for Jonathan again it is 'FOOLS'.
You have to have very low IQ, in serious denial, very afraid of Buhari, very afraid of the north or just an out an out tribalist to vote Jonathan again.

sebali:
My thoughts exactly, d capital expenditure in d 2015 budget is abt 700b naira so y borrow 2.7tr naira for infrastructural dev.
They want to borrow money to share and pay salaries(i had fed. civil servants hav not been paid since october)

barcanista:
How long can we endure?

@oP: don't mind the mod jare