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Okonjo-Iweala seeks approval of $9bn borrowing plan

06 November 2012, 11:22

Abuja - The Minister of Finance, Ngozi Okonjo- Iweala, on Monday in Abuja, urged the House of Representatives to approve a $9 billion  external borrowing plan from 2012 to  2015.  

Okonjo-Iweala, who is also the Coordinating Minister  for the Economy, made this known at a meeting with the House Committee on Aids, Loans and Debt.

She said that the ministry had proposed to swap some existing loans to kick start other key projects like housing, mortgage financing, agriculture and water supply.

 According to her, a Euro bond of $100 million would be sourced to attract Diaspora investment into the country.  

The minister explained that the borrowing plans were specific operations aimed at supporting specific projects in different states of the federation.  

She said that a proposal for $200 million has been made to support agriculture financing across the country.  

Okonjo- Iweala said that $44 million was being sourced from the Islamic Development Bank (IDB) to also upgrade hospital facilities in Kaduna.  

``The idea is to provide comprehensive and quality tertiary health services that will handle referral from primary and secondary health centres,” she said.

The minister said that the executive was not interested in pilling up external debts for the country.  

``We share completely the concerns and feelings of the National Assembly that we need to constantly monitor our debt levels.

``From the side of the executive, I do not believe that there will be any interest in trying to stalk up debts when we went through a very difficult process in trying to get out of the Paris Club debts.’’

She said that the nature of the current borrowing was mainly from multilateral agencies with soft terms unlike the Paris Club terms.

The minister assured that the country's external borrowing profile was in good shape, adding that the Debt Management Office (DMO) was monitoring borrowing profiles of the 36 states to avoid the piling up of debts.

``We always want to avoid a situation where states will not be able to pay salaries of their workers.  We now have a good picture of borrowing profile of the 36 states."   

Okonjo- Iweala said that Nigeria had the lowest debt GDP ratio in the world.  

Mr Abraham Nwankwo, the Director-General, DMO said that in spite of the request for additional borrowing plan, Nigeria’s debt profile was sustainable.

According to him, the country's external debt as at Sept. 30, stand at $6 billion while domestic debt stand at N6 trillion.

Nwankwo said that the external debt GDP ratio would remain below 5 per cent.  

He explained that the highest ratio expected between 2012 and 2015 on the external debt would be less than 3.8 per cent.

The director-general said that the DMO was planning to get the GDP of all the states with the help of the National Planning Commission, noting that there was a ceiling for all states in respect of borrowing.

Rep. Adeyika Ajayi (ACN-Osun), the Chairman of the committee,  said that the essence of the meeting was to get details of the request for additional borrowing plan as contained in the 2013 Medium Term Expenditure Framework (MTEF).

Ajayi said that the meeting would afford the committee to look at the proposal in order to approve it expeditiously.



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