China Loan Repayment: Nigeria’s Debt Office Denies Default Reports

Director-General of the Debt Management Office (DMO), Ms. Patience Oniha (News Central TV)

The Debt Management Office (DMO) in Nigeria has denied reports that the country defaulted on its loan repayment to China.

Nigeria reportedly incurred a $90 million (£81 million) penalty after its debt to China increased to $240 million (£217 million) in the previous two years.

According to reports, the loans were obtained to rehabilitate a few of the nation’s railway lines.

The DMO referred to the accusations as incorrect in a statement on Wednesday, asserting that Nigeria was completely committed to upholding its debt obligations and had not fallen behind on any of its debt service commitments.

The statement further stated that Nigeria “remains unwaveringly committed to fulfilling its debt obligations in a responsible and timely manner.”

According to the DMO, Nigeria had a $4.1 billion debt to China as of December 2021. On the present state of the Chinese loans to Nigeria, it was, however, mute.

Following a wave of rail track attacks and the kidnapping of train passengers, which temporarily halted train operations on some routes, Nigeria has recently experienced revenue losses.

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Nigeria’s Debt May Hit N77trn By May 2023

Nigeria’s DMO Denies Reports on Defaulting on China Loan Repayment (News Central TV)

The Director-General of the Debt Management Office (DMO), Ms. Patience Oniha, revealed in January 2023, that Nigeria’s entire debt stock may reach N77 trillion by the conclusion of President Muhammadu Buhari’s administration on May 29, 2023, as the country struggles with mounting debt.

This, she said, would happen if the Central Bank of Nigeria’s (CBN) Ways & Means, which have been accumulated from 2014 to 2022 and are estimated to be worth about N22.7 trillion, are securitized, along with the N44.06 trillion total debt stock as of the third quarter of 2022 (Q3 2022) and the N8 trillion in new borrowings.

According to her, securitization was the best course of action because, at the current interest rate of 18.5 percent, the government could incur additional interest costs of N1.8 trillion to N2 trillion if it failed to securitize the CBN Ways & Means. For this reason, the executive branch decided to collaborate with the National Assembly to make this happen.

The total public debt as a percentage of GDP was 22.97 percent as of September 30, 2022, falling within the 55 percent threshold advised by the International Monetary Fund (IMF) and World Bank (WB), as well as Nigeria’s self-imposed limit of 40 percent set in the MTDS 2020–2023, which is anticipated to rise to 35.33 percent after taking into account the outstanding balance on CBN Ways.

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