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Finance minister hints on why Nigeria’s debt profile rising

“Government does not expect immediate financial returns from infrastructure completed with loans”.

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Minister of Finance, Budget and National Planning, Zainab Ahmed

 Mrs. Zainab Ahmed, Finance, Budget and National Planning Minister, has disclosed that the federal government’s acquisition of loans would help the funding of projects across the country.

Ahmed’s explanation came on the heeds of criticisms that greeted the government’s ways of borrowing.

Recall, the Senate on Wednesday approved the federal government’s foreign loans request of $16bn and €1.02bn, making Nigeria’s debt stock of N35.5tn rise to N42.7tn.

President Buhari had previously sought to borrow a sum of $16.2bn, €1,02bn and a grant component of $125m to fund some “legacy projects.”

Speaking on Channels Television, Ahmed said the loans are juicy because they come with Interest Rates of 2.5 to three per cent per annum; 20 to 30 years repayment tenor and Grace Period (Moratorium) of Seven years.

The finance minister explained further that the loans allow the federal government to execute infrastructure projects across the country.

She also noted that plans are underway to toll some roads which will come with the added benefit of smooth and fast transportation between locations which in turn will accelerate business growth within and among states.

According to the minister, “Government does not expect immediate financial returns from infrastructure completed with loans.”

Meanwhile, Techeconomy.ng had previously reported that the Lagos Chamber of Commerce and Industry (LCCI) had cried out that Nigeria’s debt situation had become worrisome as the debt servicing is consuming a significant share of the revenue.

The LCCI, quoting the budget implementation report, said the debt service to revenue ratio for the period of January to May 2021 stood at about 98 per cent up from 83 per cent recorded in 2020.

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This was contained in an official statement released on Sunday titled ‘Practical steps for boosting revenue and foreign exchange inflows’ and signed by the Director-General of the LCCI, Dr. Chinyere Almona.

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The Lagos Chamber of Commerce and Industry (LCCI) cried out that Nigeria’s debt situation has become worrisome as the debt servicing is consuming a significant share of the revenue.

The LCCI, quoting the budget implementation report, said the debt service to revenue ratio for the period of January to May 2021 stood at about 98 per cent up from 83 per cent recorded in 2020.

This was contained in an official statement released on Sunday titled ‘Practical steps for boosting revenue and foreign exchange inflows’ and signed by the Director-General of the LCCI, Dr. Chinyere Almona.

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