Despite N87.38 Trillion Debt, Tinubu’s Government Approves $1 Billion Loan From AfDB
- The Nigerian government has approved a $1 billion loan from the Africa Development Bank (AfDB)
- The Minister of Finance, Wale Edun, announced the procurement of the loan, saying part of it was an inherited request for the former government
- The development comes as the Debt Management Office said Nigeria’s public debt has hit N87.38 trillion as of March 2023
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The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said the Federal Executive Council (FEC) authorized a $1 billion budget loan from the African Development Bank (AfDB).
The Minister disclosed this to reporters at the State House at the end of the FEC meeting on Monday, November 27, 2023.
Source: Facebook
Some of the funds are loan requests from Abia State
TheCable reports that Edun stated that an inherited financing and processing loan involved $100 million from AfDB and $15 million from the Canada-African Development Bank Climate Fund.
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He said:
“Essentially, it was processed before this administration came in, so it has been inherited. Essentially, it is concessional borrowing, around 4.25% per annum by Abia State, through the federal government.
“So the funds are to be lent to Abia State, and they are for waste management and rehabilitation of roads in Umuahia and Aba, in particular.
“Secondly, there was the financing of $1 billion, funding concessional, 25 years, eight years moratorium at about the same 4.2 percent per annum, which the African Development Bank approved for this administration.
“And really, it was in recognition of the macroeconomic measures that have been taken, the swift movement towards macro stability, restoring revenue, improving the foreign exchange situation, and so forth, that have been taken by this government.
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“The reward, as far as the African Development Bank, a concessional financing organization, was to provide $1 billion in general budget support.”
Per the Minister, the FEC approved N2 trillion for the Ministry of Finance to go in and out of the market to reduce interest rates on the current outstanding.
He said there would be an opportunity to save about N50 billion in debt servicing over time by giving back costly debt refinancing with cheaper funding.
Nigeria's public debt hits N87.38 trillion
Edun said some economic measures by the committee, in the short term, are being contemplated, and their report was well received by the president and approved by the council.
The Debt Management Office (DMO) said Nigeria’s total public debt increased to N87.38 trillion in Q2 of 2023, representing a 75.29% rise.
The DMO said the figure represents an N37.53 increase in total public debt compared to N49.85 trillion recorded in the first quarter of 2023.
The debt office said the increase is due to the N22,71 trillion Ways and Means advances from the Central Bank of Nigeria (CBN).
DMO said:
“Nigeria’s total public debt stock as of June 30, 2023, was N87.38tn ($113.42bn). It comprises the total domestic and external debts of the Federal Government of Nigeria, the thirty-six states, and the Federal Capital Territory,” DMO said.
It said the federal government received the approval of the National Assembly to securitize the CBN loan in May 2023.
CBN’s Ways and Means Advance is a loan extended to the federal government for short-term financial emergencies.
CBN Ways and Means advances converted to loan
The CBN Act stipulated that the loan issued shall not exceed five percent of the previous year’s revenue generated by the federal government.
But it was raised to 15 per cent in May after Muhammadu Buhari, the former president of Nigeria, requested securitization of the loan to reduce the interest paid on the principal and extend its tenor.
The total public debt was at N49.85 trillion in Q1 2023 because the DMO did not include the Ways and Means loan, an accumulation of the federal government’s debt to the CBN.
Nigeria successfully repays China, the World Bank, and others $1.17bn loan, still owing more
Legit.ng reported that the federal government paid $1.17 billion to service foreign debt commitments in the first half of 2023.
This was revealed in the Export and International Payment data released by the Central Bank of Nigeria (CBN).
The Nigerian government spent over 85% of its revenue servicing debt in February 2023.
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