The Nigerian economy is bugged down by a domestic debts put at about N600 trillion, Yerima Ngama, the minister of state for finance has disclosed.
Ngama who addressed journalist on Wednesday after a Federal Executive Council, FEC, meeting presided over by Vice President Namadi Sambo, said the reason for the high domestic debt was because of high interest rate charged by local banks, which he put at about 19 per cent.
The minister said that because of the high interest rate on domestic loans it was preferable to go for concessionary foreign loans, just as he announced the council’s approval of a loan of 100 million dollars (about N15.7 billion) from Indian Import Export Bank to boost power supply in Cross Rivers, Enugu and Kaduna states.
Ngama, however, assured that the country would not be plunged into the era of huge foreign debt with high servicing rate.
He said that the ratio of debt to GDP was slightly less than 20 per cent and that the loan was geared towards the development of infrastructural facilities.
The minister explained that the credit facilities being taken by the Goodluck Jonathan administration were different from the previous loans that led to the pile-up of huge foreign debt.
“Preponderance of commercial credits led to high interest rates, making Nigeria to pay over 40 billion dollars for debt servicing. Under the current regime, government is getting development loans also known as multilateral and bilateral assistance,” he said.
A breakdown of the sum given by the minister revealed that $30 million (about N465 million) would be given to Cross-Rivers for the development of the Calabar independent Power Project.
Enugu State government would get $40 million (about N620 million) for the electrification of 96 communities, including the installation of 33KVA and 15KVA lines as well as the distribution of transformers and other accessories to the communities in the three senatorial zones of the state.
Kaduna State government will get $30 million to augment the resources needed for the construction of the 70 Km transmission line from the Gurara Dam to Kaduna industrial area.
Ngama said the fund would also be used for the construction of 132 KVA and 33KVA sub-stations for power supply to the Kaduna industrial area and that 50 communities in the state would also benefit from solar electricity project.
The minister said that the facility, which is coming at a concessionary rate, was taken at 2 per cent interest rate to be repaid over a 10-year period with three years moratorium.
He added that there would be a commitment charge of 0.5 per cent of undrawn balance and 0.5 per cent for service charge.
Ngama said that the facility had been approved by both the National Assembly in the Medium Term borrowing plan, and by the benefiting state houses of assembly.
“We believe that this facility will go a long way towards transforming our industrial areas and other communities as part of Mr President’s commitment to economic transformation agenda,” he said.
Also, the council in a brief ceremony before the commencement of its weekly meeting, celebrated with President Goodluck Jonathan as he clocked the age of 56.
The ceremony was however, held in the absence of the President, who had left for London to preside over a three-day meeting of Honourary International Investors’ Council (HIIC).
In his remarks, Sambo hailed Jonathan for his leadership style and commitments to transforming Nigeria, saying: “There is no doubt that the great destiny of this man has helped our individual destiny”.
“We are privileged Nigerians sharing from the grace of God upon his life. We will continue to pray that Mr President succeeds in this noble course of transforming our dear country,” Sambo added.
Ministers of Transport and Agriculture, Idris Umar and Akinwumi Adesina, respectively offered special prayers for the President on behalf of the council.
The council, led by the Secretary to the Government of the Federation, Anyim Pius Anyim, also presented a birthday card to the Vice-President for onward presentation to the President, before cutting a birthday cake.
Jonathan, the 14th Nigerian Head of State, was born November 20, 1957 in Otueke, Ogbia Local Government Area of Bayelsa State to a family of canoe makers.
He holds a BSc. degree in zoology, Msc. in Hydrobiology and Fisheries Biology and a Phd in Zoology.