A total of $3.121bn has been borrowed from China, representing 11.28 per cent of the country’s external debt as at March 31, 2020, the Debt Management Office (DMO) said Thursday.
Also, the loans which were largely deployed to infrastructural development — roads and railway projects represents 3.94 per cent of the nation’s $79.3 billion debt portfolio.
Nigeria’s loan liability to China has come under scrutiny in recent days as the country’s revenue drop deepens further in the wake of the Covid-19 crisis.
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Also, a controversial clause contained in a loan agreement signed between Nigeria and Export-Import Bank of China, which allegedly concedes sovereignty of Nigeria to China has led to many calling on the Nigerian government to review how it goes about borrowing from China.
The DMO explained that in terms of foreign sources, loans from China accounted for 11.28 per cent of the external debt stock of $27.67 billion in the period under review, indicative that the Asian giant is not a major source of funding for the Federal Government.
“The total borrowing from China as at March 31, 2020 is $3.121 billion. The concessional loans have an interest rate of 2.5 per cent for 20 years. The terms and other details of the facilities are available at dmo.gov.ng.” DMO said in a statement Thursday.
It added that the “terms are compliant with the provisions of Section 41 (1a) of the Fiscal Responsibility Act, 2007. In addition, the low interest rate reduces the interest cost to government, while the long tenor enables the repayment of the principal sum of the loans over many years.
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“These two benefits make the provisions for debt service in the annual budget lower than they would otherwise have been if the loans were on commercial terms.”
