‘Nigeria does not have the capacity to borrow $23 billion’

President Muhammadu Buhari
President Muhammadu Buhari

Financial Analyst and Managing Director, Cowry Asset Management Limited, Mr. Johnson Chukwu has said the country does not have the capacity to borrow $23 billion as currently canvassed by the federal government .

Chukwu disclosed this in an exclusive chat with Daily Trust yesterday in Lagos while responding to question on the borrowing plan of the federal government.

The federal government, penultimate Tuesday, sought the approval of Senate for concessionary external borrowing of $22.8 billion for development of infrastructure across the country.

Speaking to our reporter, Chukwu expressed doubt about the capacity of the government to borrow $23 billion.

He said: “the nation’s foreign exchange earnings from the sale of crude oil in 2018 was $18.2 billion, while the figure for 2019 projected to be around $20 bn. Current national debt is N22.2 trillion Naira. The foreign component of that amount is $25 bn.

“If the federal government borrows $22 bn, it will take the total foreign component to $47bn. At that rate, interest payment alone will be more than 53 percent of our earning.

“we cannot borrow that kind of amount because we cannot afford to pay the interest let alone the principal.”

Minister of Finance and National Planning, Zainab Ahmed, who made the presentation on behalf of the federal government, when she appeared before Senate Committee on Local and Foreign Debts explained that the Federal Government had decided to approach the China-Exim Bank for $17 billion loan when other lending institutions like the World Bank and the African Development Bank (AfDB) were not forthcoming on the matter.

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