International business and economic news platform, Financial Times reported that Nigeria is seeking an “emergency loan” of $3.5billion to help finance the 2016 budget deficit of about N2.2 trillion. But while the country’s finance minister, Ms. Kemi Adeosun, refuted this claim in a statement by her Special Adviser on Media Matters, Mr. Festus Akanbi, there is still a deficit to be cleared.
Ms. Kemi said “Nigeria, as a member of World Bank group, is entitled to access available funds like every member country,” but she is also looking at the domestic market as a means to get finance. No application for loans have been made yet. “We have held exploratory talks with the World Bank, we have not applied for emergency loans to fund the 2016 budget,” she clarified.
However, considering the decline in Nigeria’s foreign reserves, possible devaluation of the Naira and an increased external debt, the country will likely be faced with a dilemma. Ventures Africa spoke with Ifediora Amobi, an economic expert and the Executive Director of African Heritage Institution, concerning the 2016 budget deficit. He supported the government’s plan to clear the deficit considering the fact that borrowing could enhance development when channelled for the right purpose.
Here is how the government intends to fund the deficit in the 2016 budget:
Money recovered from the looted fund
The Nigerian president, Muhammadu Buhari, at the 26th Ordinary Session of the African Union in Addis Ababa, mentioned that money recovered from treasury looters will be used to fund the deficit in the 2016 budget appropriation.
He was speaking about the proposed N6.077 trillion 2016 budget submitted to the National Assembly, saying the Nigerian budget, for the first time in history, will be largely financed from non-oil revenue.
A possible loan from Africa Development Bank (AfDB)?
The federal government has asked the African Development Bank for a $1 billion loan to help fund the increased budget deficit.
The bank said it was considering the loan to Nigeria where the drop in crude prices has hit growth and that an appraisal mission would visit the country soon in order to work with authorities, Reuters reported.
Export Credit agencies (China-Exim Bank)
The federal government seeks the China Exim Bank for bilateral loans for infrastructure projects specifically railway and airport rehabilitation projects dues to its concessionary interest rate. The federal government plans to raise a $25 billion infrastructural fund from the global community and establish long term bankable projects.
Yesterday, the Nigerian vice president, Yemi Osinbajo, confirmed that the China-Exim bank has agreed to finance Nigeria’s railway projects linking Lagos to Kano and Lagos to Calabar.
