China not major source of funding for Nigerian government —DMO

FOLLOWING statements and reports credited to several persons on the subject of loans obtained from China, the Debt Management Office (DMO), has provided specific details of Nigeria’s debt profile with the Peoples Republic of China.

These data, according to the DMO, show that China is not a major source of funding for the Nigerian Government.

In a press statement released on Friday, the debt office stated that as of March 31, 2020, the total borrowing by Nigeria from China was $3.121 billion. This amount, it explained, represents only 3.94per cent of Nigeria’s total Public Debt of $79.303 billion as of March 31, 2020.

Similarly, in terms of external sources of funds, loans from China accounted for 11.28per cent of the External Debt Stock of $27.67 billion as of the same date.

The DMO said it has considered it necessary to provide a sequel to its Press Release on the same subject dated September 11, 2018, adding that the general public is encouraged to be guided by the facts in thepress release.

On terms of the loans from China, the debt office explained further that $3.121 billion as of March 31, 2020, are concessional loans with interest rates of 2.50 per cent per annum (p.a), tenor of 20 years and grace period (Moratorium) of seven years.

“These terms are compliant with the provisions of Section 41 (1a) of the Fiscal Responsibility Act, 2007. In addition, the low interest rate reduces the interest cost to government while the long tenor enables the repayment of the principal sum of the loans over many years.

“These two benefits, make the provisions for Debt Service in the Annual Budget lower than they would otherwise have been if the loans were on commercial terms,” the statement read in part.

It noted that the loans which are project-tied, are 11 in number as of March 31, 2020.

They include: Nigerian Railway Modernization Project (Idu-Kaduna section), Abuja Light Rail Project, Nigerian Four Airport Terminals Expansion Project (Abuja, Kano, Lagos and Port Harcourt), Nigerian Railway Modernization Project (Lagos-Ibadan section) and Rehabilitation and Upgrading of Abuja-Keffi-Makurdi Road Project among others listed on its website.

The impact of these loans is not only evident but visible. For instance, the Idu-Kaduna Rail Line according to the office, has become a major source of transportation between Abuja and Kaduna. Also, the new International Airport in Abuja, has improved air transportation for the populace, while the Lagos – Ibadan rail line when completed, will ease traffic on the busy Lagos-Ibadan expressway.

“The projects also have the added benefits of job creation, not only by themselves but through direct and indirect service providers, a number of which are Small and Medium Enterprises.

 

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