Ngozi Okonjo Iweala, Minister of Finance
The Federal Government is planning to borrow from international financing agencies to fund infrastructure development, Coordinating Minister for the Economy and Minister of Finance, Dr Ngozi Okonjo-Iweala, said in Tokyo Sunday.
The minister, who also unfolded the Federal Government’s plan to grow the Excess Crude Account (ECA) to $10 billion by early 2013, said that the money borrowed would be used for power, water and health care among others.
The minister, who spoke to reporters on the Nigerian economy at the annual meeting of the World Bank and the International Monetary Fund (IMF), said the country needed about $10 billion yearly to tackle its infrastructural challenges, adding that Nigeria would draw from the World Bank’s loan offer with a go-ahead from the National Assembly.
A report by the News Agency of Nigeria quoted the minister as saying that Nigeria would not draw from the international monetary resources for now to tackle the infrastructure challenges.
“We are trying to put our borrowing to really direct it to infrastructure, as you know we have gone to other sources; the Word Bank is helping us with power, so is the African Development Bank. Those are very concessional resources. The problem we have right now is that the meetings from the World Bank; they are indicating that if we do not pass through external borrowing plan, where we have $1.2 billion, that has been approved,” she said.
Okonjo-Iweala said the loan to be taken would be given at zero interest rate, a 40-year repayment period and 10 years of moratorium and only 0.7 per cent commitment charge.
She also unfolded plans by government to effectively manage ECA so that it could grow to $10 billion by early next year.
The ECA, according to the figure given by the Minister of State for Finance, Dr. Yerima Ngama, on Friday, was $8.4 billion.
Doing so, she added, would enable the Federal Government to use ECA as a buffer for the nation’s foreign reserves.
According to her, “I strongly feel and I have shared with the governors, with Mr. President and vice-president who fully supports that the Excess Crude Account must be built up to $10 billion.
“We should strive to do that in the next few months and we keep that as buffer.”
The minister said if the account is built up to $10 billion and it is not touched for a while, it would serve as buffer, noting that there was the need to increase the nation’s external reserves, considering the population of the country.
“Our reserves are not huge, we are just building backup; it’s not my place, it is the monetary policy that manages it, but I have discussed with the Central Bank of Nigeria (CBN) governor that we need to build up our reserve to $50 billion, if we can.
“That will be the desires of the fiscal authorities, so I don’t consider us with the size of the economy and population we have.
“Look at Algeria, their reserve is nearly $200 billion, for a country much smaller than Nigeria,” she said.
Nigeria’s external reserves as at June were $40.3 billion.