Sunday 10 April 2016

Buhari heads to China to borrow $2bn

President Muhammadu Buhari head to China on Sunday to
sign a loan infrastructure projects deal worth about $2
billion and the low interest loan is to be deployed to finance
the N3 trillion deficit in the budget. Though the exact figure
for the loan is yet to be confirmed, the Presidency and
Chinese foreign affairs ministry confirmed the visit. The
President’s Special Adviser on Media and Publicity, Mr Femi
Adesina, who disclosed this in an interview with Reuters,
said: “I can’t tell you how much until the day the loan will be
signed. Both countries will also be signing some bilateral
agreements to strengthen their relationship, that is all I can
say for now.” In February, financial and government sources
said the loan could be as high as $2 billion, but officials
have not provided an update since then. The federal
government had said it would raise about $5 billion abroad
to cover part of its 2016 budget deficit which could be as
high as N3 trillion. Lu Kang, Chinese foreign ministry
spokesman, had earlier said Buhari would visit China from
April 11-15 to sign “cooperation agreements” and attend a
business forum. When the Finance Minister, Kemi Adeosun,
visited China in February, a Nigerian government official
said the loan deal she agreed on could be signed by
President Muhammadu Buhari. “The Finance Minister, in the
company of the Central Bank Governor, is scheduled to be
in China sometime next week to conclude negotiations on
the $2 billion loan,” the official said. Adeosun had earlier
said the country was looking for a loan with about 1.5 per
cent interest. “We looked at our debt profile and we
recognised that one big problem is interest rate. So, we are
going to try and borrow as far as possible externally. “We
are borrowing at the cheapest rates. So, multilateral loans
are the cheapest. If someone offers me 1.5 per cent over 20
years, I think I should take it. “That is why we are going to
the multilateral agencies first and, thereafter, concessional
borrowing and also tap into the Eurobond market,” the
minister had said at a KPMG forum in Lagos.

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