The Federal Government is to apply $3 billion in refinancing the legacy debts of the immediate past government, the Minister of Finance, Mrs. Kemi Adeosun, has said.
She said the outlay is part of the $5.5 billion foreign loan being sourced from the international financial markets.
Mrs. Adeosun, who spoke on TV news Programme, said the proposed $5.5 billion loan is to refinance inherited debts to the tune of $3billion and new borrowing of $2.5 billion for 2017 Budget.
“Let me explain the $5.5 billion borrowing because there have been some misrepresentations in the media in the last few weeks. The first component of $2.5 billion, represents new external borrowing provided for in the 2017 Appropriation Act to part finance the deficit in that budget,” she said, pointing out that “the borrowing will enable the country to bridge the gap in the 2017 budget currently facing liquidity problem to finance some capital projects.”
On the second component, she said: “We are refinancing existing domestic debt with the $3 billion external borrowing. This is purely a portfolio restructuring activity that will not result in any increase in the public debt.”
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Adeosun further noted that the country’s debt rising from N7.9 trillion in June 2013 to N12.1 trillion in June 2015, despite the fact that only 10 per cent of the budget was allocated to capital expenditure when oil price exceeded $120 per barrel.
She said the President Muhammadu Buhari-led administration was investing in critical infrastructural projects such as roads, rails and power in order to deliver a fundamental structural change to the economy that would reduce the nation’s exposure to crude oil.
“Under this dispensation, we are not borrowing to pay salaries. If all we do is to pay salaries, we cannot grow the economy. This administration is also assiduously working to return Nigeria to a stable economic footing. In light of this, the government adopted an expansionary fiscal policy with an enlarged budget that will be funded in the short term, by borrowing,” Adeosun said.