Nigerians Should Be Happy That We Are Using N3.2trn Chinese Loan For Infrastructure-DMO DG

The Debt Management Office has put the total external loan of Nigeria from China at N3.2trn.

The Director-General, DMO, Ms Patience Oniha who gave the figure stated that the loan constitutes about 11 per cent of the total external loan obligations of the Federal Government.

She said with the entire N3.2trn loan being invested in infrastructure projects across the country, Nigerians should be happy with the Federal Government had achieved with the borrrowed fund.

The total debt stock of Nigeria stands at about ₦32.22trn, according to figures released by the DMO

An analysis of the DMO public debt figures show that 37.82 per cent represents external debts, while the balance of 62.18 per cent is for domestic debt obligations.

The debt accumulation is coming at a time when the government is experiencing low revenues to fund the national budget.

While key government officials in the Economic Management Team had repeatedly defended the country’s debt level arguing that it is still within sustainable limit, some finance and economic experts including the World Bank had expressed worry over the ability of the government to service the debt.

In the 2021 budget, the Federal Government had set aside a provision of N3.12trn to service it’s debt with fiscal deficit widening to as high as N5.21trn.

But the DMO DG said the N3.2trn loan from China are project tied loans that was used to fund infrastructure projects.

She noted that the amount is relatively small when compared to the total debt stock of the country.

Oniha said, “I know that last year there were a lot in the public space about borrowing from China. So all of the loans we had from China, the stock of the bilateral credits which is where China belongs, that we have, is small relative to the total stock.

“So loans from China are about N3.2trn which was about 11 per cent of our total external debt. But that was small.

“To add, those are all concessional loans and there are no reasons to be worried about them, they’re all project tied which I think Nigeria should be happy about.

“We can see the physical infrastructure whether it’s the airport, whether it’s the rail lines, whether it’s the roads. So we don’t see any reasons for concerns, they’re all project tied and they’re all concessional really.

“There was a lot of debate, but we did get proper interpretations both from China and the Ministry of Justice. We also as the DMO had China loans on our website way back june 2020. They’re all concessional loans that are project tied and we are not concerned about them.”

Speaking on the concerns raised about the sustainability of Nigeria’s debt, the DMO Boss said there was no need for Nigerians to panic.

She explained that the Federal Government had not defaulted in meeting it’s debt service obligations to any of its creditors, adding that the $500m Eurobond that matured on January 28 had been redeemed.

Oniha said, “So far, let’s be very clear that there has not been any default, whether of local or international debt.

“You’re aware that some countries have had challenges in servicing their external debts but we redeemed the Eurobond that matured on the 28 January, so we are committed to servicing our debt for several reasons.”