Our Objective is to Borrow the Cheapest Possible Money – Kemi Adeosun
The Minister of Finance, Mrs. Kemi Adeosun, has said the government plans to reset Nigeria’s economy with structured borrowing, targeted investment and diversified growth.
Adeosun, who spoke to journalists after a special event hosted by the Lagos Business School at the weekend, also said part of the cash set aside to finance some energy projects would be used to help fund the budget.
“We have inherited a set of conditions that requires us to refine how we collectively work towards ushering in a new era in Nigeria,” she said.
Pointing to the impact of falling oil prices on the economy, the minister said: “In the past, we had the means but not the will. Now we have the will but we no longer have the money to invest. The safety blanket of oil has been ripped away, laying the poverty of Nigeria’s institutions bare.”
She added: “We have spent too many years tinkering at the edges of our institutions, our infrastructure and our economy and the mistakes and misjudgment of the last 40 years have set our clocks back by decades.
“We must collectively adopt a blueprint that equips the future generations to be creative and dynamic, that allows us to articulate a vision of a Nigeria, with a strong educational foundation; rich in depth of knowledge with a breadth of skills, an expansive infrastructure capable of servicing the needs of a nation of 150 million Nigerians.”
On the N1.8 trillion borrowings to invest in railway transportation, roads, housing, power and health, the minister said: “We are committed to a countercyclical budget expenditure model. This has been a success in other nations, offsetting the risk of recession and creating an economy which is not based on either fragile consumer spending or over-reliance on oil.”
Adeosun also used the forum to set out what she described as the four pillars of the economic plan: stimulate economic growth to achieve a real GDP growth of 4.2 per cent in 2017; reduce the cost of governance and strengthen institutions to combat corruption and extract efficiencies in public service; increase government expenditure on infrastructure; and fund the budget deficit and negative trade balance cost effectively.
She said the targeted outcomes would include a substantial increase in gross capital formation; acceleration of GDP growth; infrastructure development to unlock economic growth; diversification of the economy and growth of the non-oil sector; an improvement in the overall business environment; and improvement in key socio-economic indicators, jobs and wealth creation.
Adeosun also disclosed that the federal government might issue Chinese Panda bonds to help fund the 2016 budget.
She said the federal government was shopping for cheaper money to help fund the 2016 budget aimed at reviving the dwindling Nigerian economy, reported Reuters.
“Initially we were looking simply at the Eurobond market but then we began to explore opportunities in the renminbi market, so there is a possibility of issuing a Panda bond,” she said.
She added: “Our objective is to borrow the cheapest possible money and when we realised that the possibility of issuing a panda bond, which is a renminbi-denominated bond between issuing a euro denominated bond, we began to explore that opportunity. Indicatively, that will be cheaper for us than issuing a straight eurobond.”
The minister however declined to disclose the size of the possible issue, saying, “We were looking originally at doing about a billion dollars on the Eurobond market, so we may split that between the renminbi and the Eurobond.