Nigeria’s government is turning to the China Development Bank for a loan of $973,474,971.38 after the China Exim Bank (CEB) declined to grant a loan of $22,798,446,773, lawmakers said Tuesday.
Lawmakers in the House of Representatives have also approved the loan application to the China Development Bank.
For the fiscal year 2023, the Federal Government proposed a N19.49 trillion budget, of which over half the funds will be borrowed.
The government intends to finance the massive budget with N7.4 trillion in domestic borrowing and N1.8 trillion in foreign borrowing.
Nigeria’s economic woes continue to deteriorate owing to the high inflation rates, high-interest rates, fuel subsidies, and declining revenues and reserves.
About 133 million Nigerians, (63% of the population, are poor, as measured in multiple dimensions. Because over half of Nigeria’s inflation is driven by rising food prices, many poor individuals and families face hunger.
In a motion titled ‘Rescission of the 2016–2018 Federal Government External Borrowing (Rolling) Plan,’ Abubakar Fulata, Chairman of the House Rules and Business Committee said: “The House notes that the 2016–2018 Federal Government External Borrowing (Rolling) Plan was approved by the Senate and the House of Representatives on March 5, 2020, and June 2, 2020, respectively.
“The House recalls that the National Assembly approved the sum of $22,798,446,773 only under the 2016–2018 Medium Term External Borrowing (Rolling) plan.
“The House is aware of the communications from the Federal Ministry of Finance requesting approval of modifications to the financing proposal for the Nigerian Railway Modernisation Project (Kaduna–Kano segment) occasioned by the COVID–19 pandemic, where of China Exim Bank withdrew its support to finance the project.”
“The House is also aware that, in order to secure funds for the project, the contractor (CCECC Nigeria Limited), in collaboration with the Federal Ministry of Transportation, engaged China Development Bank as a new financier in the amount of $973,474,971.38 only,” he added.
Fulata requested that the House “rescind its decision on the financier and harmonized terms and approve the change of financier from China Exim Bank to China Development Bank” in the circumstances.
The House also approved the following terms from the harmonized term sheet: Segment: Kaduna-Zaria-Kano; financier: China Development Bank; loan type: commercial loan; maturity: 15 years; currency: Euro; interest rate: 2.7% + 6 months Euribor; commitment fee: 0.5%; and upfront fee: 0.5%.