Nigeria to review loans with multilateral agencies
Govt unveils three-year debt management strategy
Citing the need to ensure they are of optimal benefit to Nigeria, the Federal Government yesterday approved the renegotiation of multilateral loans obtained from agencies like the World Bank, African Development Bank (AfDB) and others.
Government said after the Federal Executive Council, (FEC) meeting presided over by Vice President Yemi Osinbajo at the Presidential Villa yesterday that it also took the strategic decision owing to concerns raised by ministers that some of the previous agreements that the Nigerian government entered into were not optimal and cabinet agreed.
In a joint media briefing addressed by Minister of Finance Kemi Adeosun and Minister of State, Budget and National Planning, Zainab Ahmed said that there was a long discussion about multilateral loans, which are loans from agencies like the World Bank, African Development Bank and so on.
“These are not grants but loans and therefore Nigeria should be confident enough to negotiate with some of these multilateral agencies to make sure that those loans we take either from the World Bank or AfDB are on terms that are advantageous to Nigerians,” Adeosun explained.
“FEC unanimously supported us and mandated the Ministry of Finance, which is the main negotiator that henceforth such loans will need to be structured so that they benefit Nigerians. We also agreed that there would be new instrument in the domestic market, particularly Sukuuk bonds, infrastructure bonds and inflation-linked bonds to deepen the domestic market and create greater opportunity in the domestic market.
“This strategy would govern how we manage our borrowings for the next three years. FEC made it very clear that we must make sure that our costs are low and manage the foreign exchange risks. They agreed that it is cheaper to borrow externally but we must manage the risk involved.”
Echoing the same sentiment, Ahmed explained that the importance of the strategy was that the debt strategy aligns with the MTEF and “it is important for us to do this to move away from short term borrowing to longer term borrowing and to move away government borrowing from the domestic market as much as possible to cheaper external loans.
Adeosun also revealed that the FEC approved a strategic three-year debt management strategy covering the period 2016-2019 submitted to it by her ministry. The minister said the new strategy had become imperative given the fact the previous one in place expired last year.