Why FG suspended plans to borrow $22.7bn

Zeinab Ahmed
Zeinab Ahmed

THE federal government has suspended plans to borrow $22.7 billion from external sources. Zainab Ahmed, minister of finance, at the 2020 International Conference on the Nigerian Commodities Market, organised by the Securities and Exchange Commission in Abuja, stated that the government would not go ahead with the borrowing programme even if it secures the approval of the National Assembly.

The finance minister explained that the decision to suspend the borrowing was due to the fact that market indices do not support external borrowings at the moment.

“The parliament is still doing its work on the borrowing plan. One arm of the parliament has completed theirs and the other arm is still working and it is a process that is controlled by the parliament itself, so we are waiting.

“However, 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,” said the minister.

She explained that the federal government is not relenting on its plans to diversify the economy, noting that unfolding events of the past few months, the coronavirus pandemic and the oil price war, had further reinforced the resolve to diversify.

She disclosed that the current challenges in the global economy had brought to the fore the need for the country to develop a non-oil attitude to everything.

The minister said the federal government planned to prioritize expenditure in favour of major capital expenditure that would have a greater impact, and which would create job and visibility and also enhance the ease of doing business in the country.

Ahmed noted that expenditure that is not critical must be deferred to a later date when things become more normal.

Vice President Yemi Osinbajo stated that government is taking steps towards developing the Nigerian commodities market, using it as a major driver for its economic diversification efforts.

“As we are all aware, Nigeria is working on diversifying its economy, as well as its revenue sources. The need to develop other channels of generating revenue and foreign exchange is critical.

“This need is further underscored by the recent drop in the global price of crude oil which also constitutes a major threat to achieving planned government expenditure,” said Osinbajo.

Mary Uduk, acting director-general of SEC, reiterated that Nigeria is endowed with agricultural, metals and energy commodities, noting that its potentials in these areas are unrealised.

“The good news, however, is that the capital market can be used as an avenue to unlock these potentials and diversify the economy, while providing jobs, creating value and contributing to governments’ revenue.

“We believe that if we can develop and institutionalise a vibrant commodities trading ecosystem in Nigeria, we can substantially address problems such as lack of storage, poor pricing, non-standardization, as well as low foreign exchange earnings affecting our agriculture and other commodities sub-sectors,” she said. – CredibleNews.ng

– Mar. 17, 2020 @ 14:55 GMT |

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