UPDATED: Nigeria plans concessionary loans to fund 2019 budget as debt serving cost rise

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ABUJA, March 27 – Nigeria plans to tap concessionary long-term loans to finance its 2019 budget in addition to borrowing at home, Finance Minister Zainab Ahmed said on Wednesday.

“We intend to fund the 2019 budget through borrowing locally and internationally with a spread of 50:50. Our focus is on concessionary long-term loans,” said a National Assembly tweet quoting the finance minister.

Nigeria, which has Africa’s biggest economy, has borrowed abroad and at home over the past three years to help to finance its budgets and to fund infrastructure projects but debt servicing cost is also rising.

Ahmed said there were challenges generating revenue but that the 2018 budget has performed well. She said the government had put in place strategies on how to finance the 2019 budget of 8.83 trillion naira ($28.9 billion).

Budgets under President Muhammadu Buhari, who starts a second term in May, have been Nigeria’s largest ever but has failed to provide the type of capital spending needed to improve infrastructure due to funding issues. The government has been seeking to boost revenue after it emerged from a 2016 recession two years ago.

On Tuesday the central bank cut its benchmark interest rate for the first time in four years by 50 basis points to 13.5 percent to try to stimulate growth, a move which could also lower borrowing cost for the government.

Buhari has pledged to revive the economy, which has faced low growth since emerging from its first recession in 25 years in 2017 after last month defeating Atiku Abubakar to win re-election.

The central bank has said GDP growth could pick up in the first quarter, buoyed by election spending and this year’s government budget, to reach 3 percent from 1.9 percent last year. ($1 = 305.95 naira) (Reporting by Chijioke Ohuocha Editing by Mark Heinrich)

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Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.

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