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Finance Minister Says Expect More Foreign Debts

By on October 15, 2012

Finance Minister, Okonjo Iweala

Nigeria’s foreign debt is swelling as the Federal Government plans to borrow more from international financing agencies to fund infrastructure development.

 

The Minister of Finance, Dr Ngozi Okonjo-Iweala made this disclosure in Tokyo yesterday, she said the money borrowed would be used for power, water, and health care among others. The Minister further announced the Federal Government’s preparation to grow the Excess Crude Account (ECA) to $10 billion by early 2013.

 

The Minister said Nigeria will borrow from the World Bank with permission from the National Assembly. Speaking at the annual meeting of the World Bank and the International Monetary Fund (IMF), she said, to tackle infrastructure challenges effectively, the country needs about $10 billion yearly.

 

On infrastructure challenges she said, “We are trying to put our borrowing to really direct it to infrastructure, as you know we have gone to other sources; the Word Bank is helping us with power, so is the African Development Bank. Those are very concessional resources. The problem we have right now is that the meetings from the World Bank; they are indicating that if we do not pass through external borrowing plan, where we have $1.2 billion, that has been approved,” she said.

 

Okonjo-Iweala noted, the loan will involve a 40-year repayment plan, 10 years of moratorium but the good news is this, it would be given at zero interest rate.

 

According to the Minister of State for Finance, Dr. Yerima Ngama, on Friday, The ECA was $8.4 billion now.

According to her, “I strongly feel and I have shared with the governors, with Mr. President and vice-president who fully supports that the Excess Crude Account must be built up to $10 billion.

“We should strive to do that in the next few months and we keep that as buffer.”

 

The minister said that, considering the population of the country, there is every need to increase the country’s foreign reserves, which would serve as a buffer.

 

“Our reserves are not huge, we are just building backup; it’s not my place, it is the monetary policy that manages it, but I have discussed with the Central Bank of Nigeria (CBN) governor that we need to build up our reserve to $50 billion, if we can.

 

“That will be the desires of the fiscal authorities, so I don’t consider us with the size of the economy and population we have.

“Look at Algeria, their reserve is nearly $200 billion, for a country much smaller than Nigeria,” she said.