- The Debt Management Office dismisses insinuations that China could take over the economy of Nigeria if it fails to repay borrowed funds
- The agency says Nigeria’s public debt is being managed under statutory provisions and international best practices
- Ngige says it is a great surprise to him that nobody is praising President Buhari and the current administration when they should be
The federal government through the Debt Management Office (DMO) has explained that Nigeria borrowed from China in order to take advantage of a cheaper source of finance.
The DMO in a statement sent to the Punch newspaper on Tuesday, September 11, stated that the government also took loans from China in order to diversify the sources of borrowed funds.
The agency dismissed insinuations that China could take over the economy of Nigeria if it fails to repay the borrowed funds, noting that the possibility of failure to repay did not exist.
The statement from the agency read in part: "The DMO has observed that there have been various comments in recent times about borrowing by developing countries from China. The DMO has therefore considered it necessary to inform Nigerians about the government’s borrowing from China,” the agency said.
“Firstly, it should be noted that based on need, and subject to the receipt of requisite approvals, the government may raise capital from several domestic and external sources to finance capital projects in order to promote economic growth and development as well as job creation.
“Regarding external borrowing, the Nigerian government accesses capital from several sources – multilaterals, such as the World Bank and the African Development Bank, as well as bilateral loans from various countries such as France (through the Agence Francaise de Development), Germany (KfW), Japan (Japan International Cooperation Agency), India (India Development Bank) and China (China Export-Import Bank).
“These loans from multilateral and bilateral lenders are typically used to finance specific capital projects across the country. The International Capital Market is another source of capital.”
“One of the reasons why Nigeria will raise capital from multilateral and bilateral sources is because they are concessional, which means that they are cheaper in terms of costs and more convenient to service, because they are usually of long tenors with grace periods.
“Prudent management of the public debt implies that the government should avail itself of the opportunity to access concessional loans, which deliver twin benefits of being more cost-efficient and supporting infrastructural development.
“Loans from concessional lenders have limits in terms of the amounts that they can provide to each country. This makes it necessary for Nigeria to have several sources for accessing concessional capital to increase the total amount available, and also to avoid undue dependence on only a few sources of concessional funds.
“Borrowing from China Exim is one of such means of ensuring that Nigeria has access to more long term concessional loans. Given the country’s infrastructure deficit, which needs to be urgently addressed, the loans from China Exim, which provide financing for critical infrastructure in road and rail transport, aviation, water, agriculture and power at concessional terms, are appropriate for Nigeria’s financing needs and align properly with the country’s Debt Management Strategy.”
The DMO stated that there was no risk of default on any loan, including the Chinese loans as Nigeria’s public debt was being managed under statutory provisions and international best practices.
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Meanwhile, the minister of labour and employment, Chris Ngige, has said that President Muhammadu Buhari should be praised for reviving the Nigerian economy from the waste of the PDP years and for restoring security to the country’s borders.
Punch reports that Ngige told newsmen on Sunday, September 9 that Nigeria would have been in ruins if Buhari had not been elected in 2015.
The minister said these to journalists in Onitsha, Anambra state where he also expressed surprise that Nigerians were not clapping for President Buhari as they should even when he revived the country’s economy from a state of comatose
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