$22.7bn Loan: China ‘Turns Down’ FG

Electricity, Road, Rail Projects To Suffer

By Fola James

The federal government has temporarily abandoned its plan to borrow $22.7 billion, the minister of finance, Zainab Ahmed said, blaming the global current economic situation.

What the minister, did not say, critics of the government say, is that China where a huge chunk of the loan is expected to come from, is currently facing serious economic problems due to the outbreak of the deadly coronavirus, and has, therefore stayed loan requests from developing countries for now.

Some Nigerians, including the civil society groups in the country have warned the federal government no to obtain the loan, contending that it will spiral the nation’s debt profile.

Judging from the signal from China, pundits have warned that Nigeria’s economic situation, badly hit by the drastic fall in crude oil price to $35 per barrel in the last few weeks,will get worse.

Many ongoing federal government projects in electricity, road and rail construction, it’s believed, will suffer serious setback for lack of funds.

The federal government has bench-marked the 2020 Budget on $56 pbd.

But the minister said on Monday that the current global economic realities have forced the federal government to temporarily shelve the plan.

Ahmed said “The parliament is still doing its work on the borrowing plan. One arm of the parliament has complet­ed theirs and the other arm is still working and it is a pro­cess that is controlled by the parliament itself, so we are waiting.

However, we are not going out immediately because the market indication is not in favour of external borrow­ing at this time. Even if we get approvals we will defer it and watch the market and go out only when the timing is right.”

The minister told the National Assembly last February, that close to 70 per cent (that is, $17,065,496,773) of the new $22.7 billion loan will come from China.

Apart from China, the other lending agencies will provide the rest; World Bank, $2,854,000,000; African Development Bank (ADB), $1,888,950,000; Islamic Development Bank (IDB), $110,000,000; Japan International Cooperation Agency (JlCA), $200,000,000; German Development Bank (KFW) – $200,000,000; China Exim Bank, $17.065.496.773; and the French Development Agency (AFD), $480,000,000.

The situation in China, global economic watchers say has forced the Asian giant to abandon its financial obligations to Nigeria and other loan seeking countries, particularly in sub-Saharan Africa.

The country is far from recovery after it was first hit by the virus outbreak in December last year.

According to Bloomberg, Chinese industrial output has plunged 13.5% in the last three month of the outbreak.

Retail sales, within the period fell 20.5 per cent, and fixed-asset investment dropped 24.5 per cent according to Bloomberg.

For the first time in more than a decade the unemployment rate in the country has jumped to a record 6.2 percent, the situation has “worsened and much of the economy was shutdown,” the publication said.

Meanwhile, the Coalition of United Political Parties (CUPP), on Monday warned the Chine government not to grant the loan to the federal government.

CUPP has also dragged President Muhammadu Buhari, the National Assembly, and lend­ers to court over the issue.

“The Nigerian opposition coalition (CUPP), acting through one of the reg­istered political parties/coa­lition member, has just com­menced a legal offensive to stop the proposed borrowing of the sum of $22.7 billion by the Buhari government and also written to all the lend­ers to halt the loan request action,” Ikenga Imo Ugo­chinyere, told newsmen in Abuja yesterday.