Minister of Finance, Mrs Kemi Adeosun, on Thursday, explained the rationale behind the Federal Government’s decision to borrow $5.5billion.
Amid concerns raised by Nigerians about the nation’s foreign debt profile, Adeosun, who appeared on Channels Television’s Sunrise Daily, said: “we are not in a huge amount of debt.”
The minister’s statement comes more than two weeks after President Muhammadu Buhari wrote to the National Assembly, seeking the approval for $5.5bn external loans to finance the 2017 Appropriation Act.
She, however, maintained that the country’s debt profile stands low when compared to developed nations.
“Nigeria’s borrowings are actually low relative to the size of our GDP; it is one of the areas where we are doing very well. We have a debt GDP of 17 percent; Ghana is 68, South Africa is about 52, most developed countries are about 50.
“The threshold for a developing economy is 40; we are 17, Britain is 89, America is over a hundred. Even Germany which is probably the most conservative borrowing country in Europe is 68. So we are not in the huge amount of debt,” the minister said.
On the controversy trailing the proposed loan, She said, “Out of that $5.5bn, $2.5bn is for the 2017 budget, $3bn is simply to refinance money that we already owe. We inherited a lot of treasury bills; so every 90 days, those bills mature and we have to pay interest on them.
“So what we want to do is to take $3bn and then as the treasury bills mature, we will refinance from naira into dollar,” she added.