Monday, 11 April 2016

Finance minister denies the existence of $2 billion China loan

President Buhari arrived on his four day trip to China this morning
Arguments continues to surround the official trip of President Mohammadu Buhari to China as the presidency and finance ministry continue to give conflicting information on the agenda of meetings between the Nigerian government and Chinese officials currently being held in the Chinese capital Beijing.

Presidency spokesman Mr Femi Adesina revealed to Reuters last week that key on the agenda of the presidential visit was a loan agreement which he said Buhari would sign during the visit, but a senior finance ministry official said no such loan deal would be signed during the visit. 

At the time, Adesina declined to disclose the amount involved in the loan deal, adding that there would also be some bilateral agreements between the country to be signed during the meeting.

Buhari’s media adviser Adesina
The report indicated that the amount could be in the region of N400 billion. However, a source close to the minister of finance, Mrs Kemi Adeosun, said that the minister is not aware of any such loan deal with China, adding that no such deal would be signed by the president during the visit. 

The ministry also confirmed that Nigeria is considering selling Chinese Panda bonds to help finance the 2016 budget.

Chinese Panda bond is a yuan-denominated debt instrument issued by non-China based institutions and sold on China’s domestic money market to raise funds for projects and businesses outside China. The finance ministry is also looking at selling Eurobonds as part of government’s international arrangements for the 2016 budget deficit funding of about N2.2 trillion. 

On borrowings for the budget funding, Mrs Adeosun, had said that in addition to the above funding plans the government was looking at borrowing, firstly from multilateral agencies.

‘‘Our borrowing policy will remain conservative and will see us access the lowest available funds, hence our decision to approach multilateral agencies in the first instance, for budget support at concessional rates as low as 1.5% per annum,” the minister said. 

‘‘We have also secured commitments from Export Credit Agencies that are tied to specific capital projects including key initiatives in power, transport and other infrastructure, and at semi-concessional rates.

‘‘The balance will be sourced commercially to create a blended cost of capital that’s as low as possible. ‘‘Borrowing is not our primary focus. Increasing our internally generated revenue is critical because it is sustainable; and because much of the funds collected went unremitted to Government – something we are tackling now. 

‘‘Our Revenue Team holds daily revenue sessions with MDAs during which clear targets are set and agreed; monitoring and evaluation are continuous.’’

Nigeria has said it wants to raise about just under N1 trillion abroad to cover part of its 2016 budget deficit which could be as high as N3 trillion.

 Buhari has not signed the 2016 budget bill yet as he still awaits details from parliament which passed it last month. 

The Chinese Foreign Ministry spokesman Lu Kang had earlier said in Beijing that Buhari would visit China to sign ‘cooperation agreements’ and attend a business forum.

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