The Managing Director of the Debt Management Office, DMO, Mr. Abraham Nwankwo has explained that Nigeria needs to take advantage of the soft terms of the loan being sought by President Muhammadu Buhari for addressing infrastructural deficits in the country.
Nwankwo said this against the backdrop of the Senate’s decision to reject Buhari’s $30bn loan request.
Recall that the Senate had yesterday rejected the current government’s N9.61trillion loan request.
Reacting to the Senate’s decision, the DMO MD urged the Senate to quickly approve the loan authorisation because it was so important due to it flexible repayment plan of three years.
Nwankwo disclosed that the $30bn was actually for a three year-period, of 2016 to 2018, which is to be repaid between 20-30 years’ time, adding that repaying the loan will not be difficult.
Pointing out other attractions of the proposed loan, DMO boss said the low concessionary interest rate, at about 1.5 per cent, was different from previous loan arrangements with the Paris Club of creditors, which came with 18 per cent interest rate.
Featuring on Channels Television, Nwankwo said, “When you are in the kind of economic situation the country has found itself, you have to decide where you want to start addressing the problem. The most critical point to start is to deal with infrastructure problem.
“If you deal with infrastructure problem, the cost of power, transportation and most other goods and services will be forced down on the long run. The development will have a significant impact on the price level in the economy.”
Highlighting how the proposed loan will be spent, Nwankwo said $10bn would be spent per annum for three years, targeting infrastructural development in all states with specific emphasis on agriculture, health, education, water supply sectors as well as those to facilitate growth in the economy and employment generation, poverty reduction through social safety net programmes and governance and financial management reforms.
“The way to go is to have adequate infrastructure, power road, transportation ICT. All these would make the cost of production in the economy much lower, while the cost of goods and services will be lower and inflation forced down. When inflation is down, monetary policy rate will be lower, translating to a lower lending rate,” he said.
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