President Muhammadu Buhari has endorsed the Minister of Finance, Mrs. Kemi Adeosun’s plan to seek external loans at an interest rate of 1.25 per cent.
Adeosun had earlier revealed plans to take long-term loans at a very low interest rate from the African Development Bank (AfDB), World Bank, China Exim Bank and other specific financial institutions across the world.
“We have a very conservative borrowing programme, and we must borrow to construct rail – the rail we have now was done in the colonial era – and there has been really significant upgrade. We will borrow sustainably and conservatively to make sure we don’t burden future generation,” she said.
She explained that her borrowing plan is clearly different from what obtained in the past where Nigeria borrowed to pay salaries, stating that the government would be borrowing to invest in infrastructure and generate additional revenue.
In a series of tweets on Thursday, Buhari’s office said the borrowing plan was awaiting the approval of the National Assembly.
Aside the concessional loans, the Federal Government said it would tap into the Eurobond market in “due course”, to seek funding for healthcare, mining, power and agriculture.
The 2016 budget, with an expansionary outlook, has a deficit in excess of N3 trillion, which the Federal Government intends to use to stem both internal and external borrowing.
With Nigeria in recession, the Ministry of Finance and the Presidency are working hand-in-hand to revamp the economy in the shortest possible time.
According to the Minister, much of the external borrowing would be devoted to provision of infrastructure including rail, power, road and health to booast government diversification agenda.
Recall that recently the government awarded the China Civil Engineering Construction Corporation (CCECC) a $1.68 billion contract to upgrade and modernise the Kano-Kaduna segment of the Lagos-Kano rail line.
In context, the rail line would move as fast as travelling from Lagos to Ibadan in 48 minutes and is expected to be faster than the Kaduna-Abuja rail line.
CCECC also signed a contract worth $3.4 billion for the construction of the Calabar-Port Harcourt Segment 1, which aims to extend the rail line between Calabar and Port Harcourt to Onne Deep Seaport.
The Abuja-Kaduna rail line was delivered on July 13, 2016, while the Lagos-Ibadan segment remain uncompleted.
Rotimi Amaechi, Minister for Transportation, said the newly signed projects would be concluded in two years. On Friday, CCECC said the project would be concluded in 36 months (three years), contradicting Amaechi’s position.
The same Chinese firm also announced it won the $1.851 billion Kano city light rail project.
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