Minister of Finance, Kemi Adeosun has said it may take five to 30 years before the $5.5 billion being sought by President Muhammadu Buhari can be repaid.

Background:

• Buhari had written a letter to the National Assembly seeking approval to borrow $5.5 billion.
• The President said $3 billion would be used to service domestic debts while $2.5 billion would be for the funding of the 2017 budget.
• The Peoples Democratic Party however asked the National Assembly not to approve the loan.

What Adeosun said:

While speaking when she appeared before the senate committee on local and foreign debts, Adeosun who was represented by Patience Oniha, director-general of the Debt Management Office (DMO), said it was a long-term loan.

“In terms of tenure, from the figures that distinguished senators have reeled out, we have them in various tenors. What you do is at the time you get to the market and you want to price, you will be more certain about the price. It could be anywhere from five to 30 years,” Adeosun said.

“On borrowing, when the current generation may not be around at that time (payment completion), the truth is that if we are borrowing in the long term, we are using it to finance capital projects, which are also long-term and the benefits of those projects are also long-term.

“I believe that some of the roads and even institutions like some universities that we see today were built before some of us were born. We should look at it this way; that the benefits are also long-term.

“The implication of having that large amount in domestic debt is high debt service because the costs of – meaning interest rates are high.”

Azeez