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October 31, 2017 at 11:17AM
Nigeria News today & Breaking news ▷ Read Nigerian newspapers 24/7
Jerrywright Ukwu
- The African Development Bank (AfDB) has called off a loan to Nigeria
- The loan would have helped fund it’s budget which has been financially deficient due to falling crude oil prices
- The AFDB has decided to channel the money into specific projects
Agency reports monitored by NAIJ.com indicates that the AfDB has withdrawn its proposed loan to Nigeria totaling $400 million (N143,800,000 billion).
The Nigerian government had sought the loan to fund it’s budget which has been financially deficient due to falling crude oil prices.
A vice president at the lender however said the development bank has decided to channel the money into specific projects.
President Buhari's government has been depending on loans to fund the Nigerian budget. Source: Twitter
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The AfDB had been in talks with Nigeria for around a year to release the second, $400 million tranche of a $1 billion loan to shore up its budget for 2017, as the government tried to reinvigorate its stagnant economy with heavy spending.
However, NAIJ.com gathered that Nigeria has not met the terms of the international lenders, which also included the World Bank, to enact various reforms, including allowing its currency, the naira, to float freely on the foreign exchange market.
Rather than loan Nigeria money to fund its budget, the AfDB is likely to take at least some of that money and “put it directly into projects,” its vice-president for power, energy, climate change and green growth, was quoted as saying during a Nordic-African business conference in Oslo, Norway.
“Because prices for oil, on which Nigeria’s government relies for about two-thirds of its revenues, have risen and the naira-dollar exchange rate has improved, the country is relying less than expected on external borrowing,” Hott added.
Nigeria’s 2017 budget, N7.44 trillion, is just one in a series of record budgets that the government has faced obstacles funding, pushing it to seek loans from overseas.
In late 2016, the AfDB agreed to lend Nigeria a first tranche of $600 million out of $1 billion. But negotiations over economic reform later bogged down, blocking attempts to secure the second tranche of $400 million.
Earlier this month, the head of Nigeria’s Debt Management Office said the country is still in talks with the World Bank for a $1.6 billion loan, which will help plug part of an expected $7.5 billion deficit for 2017.
The Buhari administration is also trying to restructure its debt to move away from high-interest, naira-denominated loans and towards dollar loans, which carry lower rates.
Meanwhile, Nigeria's finance minister, Kemi Adeosun, has said more than half of the recent loan request by the federal government was to refinance loans taken by former president Goodluck Jonathan's administration.
According to the minister, the proposed $5.5 billion loan was made up of two components, refinancing of heritage debts and new borrowing of $2.5 billion for Budget 2017.
Has President Buhari truly taken Nigeria out of recession? - on NAIJ.com TV:
Source: Naija.ng
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UPDATE: AfDB denies withdrawing proposed $400m loan to Nigeria
https://www.naija.ng
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