Friday, April 8, 2016

Buhari heads to China to borrow $2bn


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President Muhammadu Buhari will visit China on Sunday to sign a loan infrastructure projects deal worth about $2 billion and the low interest loan is to be deployed to finance the N3 trillion deficit in the budget. Though the exact figure for the loan is yet to be confirmed, the Presidency and Chinese foreign affairs ministry confirmed the visit. The President’s Special Adviser on Media and Publicity, Mr Femi Adesina, who disclosed this in an interview with Reuters, said: “I can’t tell you how much until the day the loan will be signed. Both countries will also be signing some bilateral agreements to strengthen their relationship, that is all I can say for now.” In February, financial and government sources said the loan could be as high as $2 billion, but officials have not provided an update since then. The federal government had said it would raise about $5 billion abroad to cover part of its 2016 budget deficit which could be as high as N3 trillion. Lu Kang, Chinese foreign ministry spokesman, had earlier said Buhari would visit China from April 11-15 to sign “cooperation agreements” and attend a business forum. When the Finance Minister, Kemi Adeosun, visited China in February, a Nigerian government official said the loan deal she agreed on could be signed by President Muhammadu Buhari. “The Finance Minister, in the company of the Central Bank Governor, is scheduled to be in China sometime next week to conclude negotiations on the $2 billion loan,” the official said. Adeosun had earlier said the country was looking for a loan with about 1.5 per cent interest. “We looked at our debt profile and we recognised that one big problem is interest rate. So, we are going to try and borrow as far as possible externally. “We are borrowing at the cheapest rates. So, multilateral loans are the cheapest. If someone offers me 1.5 per cent over 20 years, I think I should take it. “That is why we are going to the multilateral agencies first and, thereafter, concessional borrowing and also tap into the Eurobond market,” the minister had said at a KPMG forum in Lagos.