It is okay to borrow now – Rewane
By Nsikan Ikpe
Relief has washed over the Federal Government of Nigeria following the approval of a much anticipated loan by the board of the African Development Bank, AfDB to the nation.
This is coming even as the Managing Director of the Financial Derivatives Company has said that the time for the country to borrow is now, though he is also joining the throng of voices in the National Assembly and beyond that are insiting that the executive must be more convincing and detailed in explaining to Nigerians the full terms of borrowing.
Mr Rewane who stated this in a chat with Channels Television on Wednesday noted that the cost of money in the international market today was presently quite beneficial to the nation’s borrowing intentions, affirming that this was not guaranteed to remain going into 2017.
As part of its decision on Nigeria’s loan request, the African Development Bank’s board approved a $600 million loan for Nigeria that is aimed at helping Africa’s largest economy plug its budget deficit as it grapples with its first recession in more than 20 years, a senior bank official said.
The loan is the first tranche of a total $1 billion budget support package. The second disbursement of $400 million is dependent upon the implementation of reforms, the bank’s Nigeria country director, Mr. Dore said.
Dore said one of the main triggers for the release of the remaining tranche will be when the government spells out its plan for overcoming its current economic challenges.
“The economic recovery plan that the government is working on must be a package of comprehensive reforms, including even exchange rate policy, the consistency with regards to the monetary policy and structural reforms,” he said.
If it meets the bank’s reform requirements, the tranche is expected to be approved by the board early next year.
Nigeria’s economy has been shrinking largely as a result of a plunge in oil prices since mid-2014. Attacks on energy facilities in the Niger Delta have also cut crude production by around a third since the start of the year.
The bank noted that oil generates around 70 percent of Nigerian government revenues. The drop in prices has left Nigeria struggling to fund a record 6.06 trillion naira ($20 billion) 2016 budget that aims to stimulate growth by tripling capital expenditure
Finance Minister, Kemi Adeosun