Nigeria borrowed $2.02bn from China in six years – DMO

Muhammadu Buhari - President of Nigeria
Muhammadu Buhari - President of Nigeria

Data from the Debt Management Office on Monday revealed that the regime of the President, Major General Muhammadu Buhari (retd) has taken a loan of $2.02bn from China since 2015.

Quoting statistics from DMO, The PUNCH gathered that the country's debt portfolio from China rose to $3.40bn as of March 31 from a total debt of $1.38bn as of June 30, 2015.

The loans from China are concessional loans with interest rates of 2.50 per cent per annum, a tenor of 20 years, and a grace period (moratorium) of seven years.

The debt office said that the terms of the loans were compliant with the provisions of Section 41 (1a) of the Fiscal Responsibility Act, 2007.

The loans from China are tied to projects. The projects, (eleven in number as at March 31, 2020), include the Nigerian Railway Modernisation Project (Idu-Kaduna section), the Abuja Light Rail Project, Nigerian Four Airport Terminals Expansion Project (Abuja, Kano, Lagos and Port Harcourt), Nigerian Railway Modernisation Project (Lagos-Ibadan section) and the Rehabilitation and Upgrading of Abuja-Keffi-Makurdi Road Project.

The DMO said the low-interest rates on the loans reduced the interest cost to the government while the long tenor enabled the repayment of the principal sum of the loans over many years.

However, as of March 31, a total of $719.61m had been made as debt service payments to China since the third quarter of 2015.

Of the amount paid as debt service, 46.15 per cent ($332.03m) was paid to service the interest on the loans.

In the first quarter of 2021, $102.19m was used to service debt to China. This is about 11 per cent of the total $1.0bn used to service external debts within the period.

The DMO recently disclosed that Nigeria had more than $5.83bn foreign loans that had been approved but not yet disbursed as of December 31, 2020.

Out of this amount, $1.25bn is supposed to come from the Export-Import Bank of China. Apart from multilateral agencies, China has remained the nation's largest creditor.

There had been fears among Nigerians that the country may forfeit some of the projects in case of loan defaults.

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