Nigeria ‘eyes’ $2bn China loan for 2016 budget

Kemi Adeosun, minister of finance, and Godwin Emefiele, governor of the Central Bank of Nigeria (CBN), are to visit China for a $2 billion loan, Reuters is reporting.

The loan, which is expected to be up to N400 billion, is aimed at the financing of budget 2016 with a record deficit of about N2.2 trillion.

Government sources say Nigeria, which is suffering its worst economic crisis for decades, has shelved plans to meet investors about returning to commercial borrowing on the Eurobond market.

One Nigerian government official told Reuters that any loan agreed during Adeosun’s trip could be signed by President Muhammadu Buhari in Beijing by March.

“The finance minister, in the company of the central bank governor, is scheduled to be in China sometime next week to conclude negotiations on the $2 billion loan,” the official said.

The official acknowledged negotiations had been underway for some time and that the terms had yet to be agreed. However, he added: “Hopefully it may be sorted out during this meeting and the loan will be signed during President Buhari’s visit to China in March this year.”

The central bank could however not confirm whether Emefiele would be joining Adeosun.

Adeosun had earlier said the country was looking for a loan with about 1.5 percent interest.

“We looked at our debt profile and we recognised that one big problem is interest rate. So, we are going to try and borrow as far as possible externally,” she said at a KPMG forum in Lagos.

“We are borrowing first of all at the cheapest rates. So, multilateral loans are the cheapest.

“If someone offers me 1.5 per cent over 20 years, I think I should take it. So, that is why we are going to the multilateral agencies first and thereafter concessional borrowing and also tap into the Eurobond market.

“We are doing about N900 billion of the deficit in domestic and N900 billion in external borrowings. We are trying not to crowd out the private sector in the domestic debt market, that is why we are looking at external borrowings also.”

Nigeria wants to raise about $5 billion abroad to cover part of its 2016 budget deficit.

This is projected to hit 3 trillion naira ($15 billion) due to heavy infrastructure spending at a time when the slump in global oil prices has slashed it export revenues.