Nigeria set to negotiate $2bn loan from China

By Odunewu Segun

President Muhammadu Buhari is expected to negotiate a $2 billion loan with China next month during his official visit to Beijing as part of the $5 billion needed to cover part of the 2016 budget deficit.

National Daily gathered that the impending negotiation is coming as government seemed to have shelved plans to meet investors about returning to commercial borrowing on the Eurobond market. “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,” said the official, who asked not to be named.

With China largely closed for the Lunar New Holiday, it is unclear how keen Beijing is on the idea, or how tough a bargain it might demand. The official acknowledged negotiations had been underway for some time and that the terms had yet to be agreed. However, he added: “Hopefully it may be sorted out during this meeting and the loan will be signed during President Buhari’s visit to China in March this year.”

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President Buhari had asked China last December to fund rail and power projects and Adeosun, who already visited Beijing last week, has raised the possibility of seeking a loan from the Export-Import Bank of China.

Nigeria had wanted to raise $1 billion from Eurobond investors but later dropped plans to sound them out at a non-deal “road show” which the finance ministry had tentatively planned for March, financial sources say. “They will wait a bit with a road show as they wouldn’t be able to get a good deal,” said one source familiar with the finance ministry plans.

While the government official foresaw a $2 billion China loan; a financial source put the amount at more than $1 billion. The finance ministry could not be immediately reached for comment.

Adeosun has said Abuja has held “explanatory talks” with the World Bank. It has also asked the African Development Bank for a $1 billion budget support loan.