An advance team headed by the finance minister is expected to travel to Negotiate the loan and President Buhari would travel to China to sign the loan in March. President Muhamadu Buhari recently presented an ambitious budget to Nigeria’s parliament. At 30 Billion dollars, it is the highest Budget proposal in Nigeria’s history.
Analysts think Buhari’s administration is attempting to spend its way out of recession by investing a huge chunk of the budget in infrastructure but he doesn’t have access to funds for that. The deficit stands at $5 billion for now but it could rise up to $15 as Buhari’s administration plans to spend billions on infrastructure and uplifting social service.
Nigeria’s economy has been contracting consistently for more than a year – Rapidly falling oil prices taking a toll on the economy.Crude oil accounts for 90% of the country’s exports and 70% of its earnings.
Development expert Jayi Gaskia thinks Nigeria needs the loans for immediate budgetary support but a major bailout could be imminent unless a resurgence in crude oil prices happens soon.
“It’s about transportation generally about land transportation particularly so it’s about roads and the railways. The question to then ask is ‘what’s your plan for the roads?’ How do you see transportation as part of this economy? What role do you want transportation to play in this economy? So if you are looking for Example massively linking up all the major metropolises in Nigeria through rail for example if you are thinking of linking sea ports and being able to evacuate goods to all parts of the country thoroughly rail, then you invest in that rapidly and then you can say that’s going to be beneficial for the economy” Said Jayi Gaskia
Last year Nigeria barely escaped a recession – experiencing double negative growth in succession. It is currently grappling with a shortage of foreign currency- with the Naira trading at 334 to a dollar in the parallel market although the central bank has kept the official exchange rate at 197.
The fall in crude prices has had a debilitating effect on the economy here, the country relies 90% on oil for its export revenue-As a result Its savings have stagnated and now the country is on a path to increasing debt levels with limited ability to pay back-at least in the short run.
But Buhari’s administration believes investment in the countries infrastructure could make the country more attractive to foreign investors and overtime wean the economy from over dependence on oil revenue.
