.Says China not a major source of funding for Nigerian government
The Debt Management Office (DMO), has disclosed that the total borrowing from China is about $3.121 billion as at March 31, 2020.
The DMO in its fact sheet on Chinese loan to Nigeria, emphasized that China is not a major source of funding for Nigerian Government.
It stated, ”As at March 31, 2020, the total borrowing by Nigeria from China was $3.121 billion. This amount represents only 3.94 per cent of Nigeria’s total public debt of $79.303 billion as at March 31, 2020.
“Similarly, in terms of external sources of funds, loans from China accounted for 11.28 per cent of the External Debt Stock of $27.67 billion at the same date. These data, show that China is not a major source of funding for the Nigerian Government.
Giving details on the terms of the Loans from China, DMO said the $3.121 billion are concessional loans with interest rates of 2.50% per year, tenor of 20 years and grace period (Moratorium) of seven years.
It stated, “These terms are compliant with the provisions of Section 41 (1a) of the Fiscal Responsibility Act, 2007. In addition, the low interest rate reduces the interest cost to government while the long tenor enables the repayment of the principal sum of the loans over many years.
“These two benefits, make the provisions for Debt Service in the
annual budget lower than they would otherwise have been if the Loans were on commercial terms,” it stated.
It continued, “The $3.121 billion loans are project-tied loans. The projects, (eleven – 11 in number as at March 31, 2020), include: Nigerian Railway Modernization Project (Idu-Kaduna section), Abuja Light Rail Project, Nigerian Four Airport Terminals Expansion Project (Abuja, Kano, Lagos and Port Harcourt), Nigerian Railway Modernization Project (Lagos-Ibadan section) and Rehabilitation and Upgrading of Abuja – Keffi- Makurdi Road Project, among others.
“The impact of these Loans is not only evident but visible. For instance, the Idu – Kaduna Rail Line has become a major source of transportation between Abuja and Kaduna. Also, the new International Airport in Abuja, has improved air transportation for the populace, while the Lagos – Ibadan rail line when completed, will ease traffic on the busy Lagos -Ibadan Expressway.
“The projects also have the added benefits of job creation, not only by themselves but through direct and indirect service providers, a number of which are Small and Medium Enterprises. It is widely accepted that investment in infrastructure is one of the most effective tools for countries to achieve economic growth and development. Using Loans from China to finance infrastructure is thus in alignment with this position,” it stated.
