Nigerian govt says external borrowing within sustainable limits
The Nigerian government has said that it will continue to borrow within manageable limits and per the country's debt sustainability framework while refuting allegations of overborrowing
- ABUJA — The Nigerian government has said that it will continue to borrow
within manageable limits and per the country's debt sustainability framework
while refuting allegations of overborrowing from concerned citizens.
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- In a statement issued on Wednesday in Abuja, the Nigerian
capital, the Federal Ministry of Finance said the most populous African country
has adopted a structured, forward-looking approach that facilitates
comprehensive financial planning and avoids the inefficiencies of ad-hoc or
reactive borrowing practices.
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- The statement responded to reactions from citizens
questioning a recent request from President Bola Tinubu to the National
Assembly for the approval of the 2024-2026 external borrowing rolling plan, also
known as the Medium-Term Expenditure Framework, under both the Fiscal
Responsibility Act 2007 and the Debt Management Office Act 2003.
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- Tinubu has requested the National Assembly's approval to
secure external loans of 21.5 million US dollars and 15 billion yuan, along
with a grant of 65 million euros, as part of the Nigerian government's proposed
external borrowing plan.
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- The proposed borrowing will be sourced mainly from the
country's development partners, including the World Bank, African Development
Bank, French Development Agency, European Investment Bank, JICA, the
Export-Import Bank of China, and the Islamic Development Bank, reports Xinhua
news agency.
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- "This strategic method enhances the country's
ability to implement effective fiscal policies and mobilise development
resources," the official statement said. "The plan outlines the
external borrowing framework for both the federal and sub-national governments
over three years, accompanied by five detailed appendices on the projects, terms
and conditions, implementation period, and others."
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- The borrowing plan does not equate to actual borrowing
for the period or an automatic increase in the nation's debt burden, said the
statement, noting that the actual borrowing for each year is contained in the annual
national budget. In 2025, the external borrowing component is 1.23 billion
dollars.
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- According to the statement, the nature of the rolling
plan means that borrowings are split over the period of the projects, with a
large proportion of projects in the 2024-2026 rolling plan having multi-year
drawdowns of between five and seven years, which are project-tied loans.
