Yemisi Izuora/Agency Report
The federal government is considering to tap concessionary long-term loans to finance its 2019 budget in addition to borrowing at home.
According to the Finance Minister Zainab Ahmed who gave the hint 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,” Reuters reported quoting a National Assembly tweet which reported the finance minister as saying.
Nigeria, which has Africa’s biggest economy, has borrowed abroad and at home over the past three years to finance its budgets and 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, adding that the government had put in place strategies on how to finance the 2019 budget of N8.83 trillion ($28.9 billion).
Budgets under President Muhammadu Buhari, who is very likely to start 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 of Nigeria, CBN, sliced its benchmark interest rate for the first time in four years by 50 basis points to 13.5 per cent 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 per cent from 1.9 per cent last year.