The Federal Government has indicated that it may have to drop its external borrowings plan of $22.718 billion to finance infrastructure and other social development projects.
Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed gave the signal yesterday on the sidelines of the 2020 International Conference on the Nigerian Commodities Market, organized by the Securities and Exchange Commission (SEC) in Abuja.
The loan proposal was recently stood down by the federal House of Representatives without explanations, days after it was approved by the Senate arm of the National Assembly. The Minister said prevailing economic variables in the global economic landscape and not the expected approval from the House of Representatives will determine if the fiscal authorities will go ahead with the borrowing plan.
“Market indication is not in favor of external borrowing at this time. So even if we get the approval from the National Assembly to go on, we may defer it and then watch the market and only go out when the market is right,” the Minister said.
Mrs. Ahmed said government is focusing on other areas to raise revenues to finance its expenditures without necessarily going to high borrowing at this time. She added that government is intensifying efforts to diversify the nation’s economy.
A major reason the federal government is presently considering the suspension of the external borrowings is the unfolding events of the past few months with particular regard to coronavirus pandemic and the oil price crash at the international market.
She explained that the plan was to go ahead with the borrowings from multilateral and bilateral lenders to fund infrastructure with multiplier effect on job creation and higher value for the economy, but added that expenditures that are not critical must be deferred to a later date.
She said government is contemplating suspension of the plan for now because market indices do not support external borrowings at the moment.
Noting that the House of Representatives is yet to commence work on the proposal, the Finance Minister however said, “We are not going out immediately because the market indication is not in favour of external borrowing at this time. Even if we get approvals we will defer it and watch the
market and go out only when the timing is right.”