Nigeria Federal Government pegs foreign loans at $3bn

[Richard Akindele]

President Olusegun Obasanjo has approved a ceiling of $3billion for foreign bilateral loans in 2006, as part of measures to curb frivolous external borrowings at both the federal and state levels.

The President also authorised ceilings of $1.5billion and $2billion for foreign bilateral loans in 2007 and 2008, THE PUNCH learnt on Friday.

His approval followed the request made by the Minister of Finance, Dr. Ngozi Okonjo-Iweala, in a memo to the President titled, “Prudential Limit for Foreign Loan Arrangement for 2006-2008.�

In the memo, dated April 17, 2006, the minister recommended the placement of a ceiling on external loans.

According to her, the loan peg is to prevent the country from reverting to her previous position of unsustainable external debt, arising from the accumulation of poorly serviced debts.

In his approval letter to the minister’s request, dated April 18, the President directed that the country’s external bilateral loan should, henceforth, not exceed $3billion, $1.5billion and $2billion in 2006, 2007 and 2008.

Oluyinka Akintunde, THE PUNCH