The Nigerian Government is set to inject an additional 350 billion naira (1.1 billion dollars) into the economy and raise 1 billion dollars from Eurobonds by mid-December to ease the recession.
The Minister of Finance, Mrs Kemi Adeosun told journalists in Abuja that the additional funding, on top of the initial 420 billion naira released in May, is primarily for capital expenditure projects that would also involve support from local banks and transaction partners.
Mrs Adeosun noted that Nigeria plans to borrow a total of 1.8 trillion naira at home and abroad to fund an expected budget deficit of 2.2 trillion naira.
Aimed at reviving the crashed economy, the government has approved borrowing from the African Development Bank, China, Japan and World Bank with rates of 1.25 percent and a 20-year maturity.
She said Nigeria must get out of paying so-called cash calls to joint ventures with oil and gas companies to stand a chance of pulling its ailing economy out of recession
The minister said the Nigerian National Petroleum Corporation (NNPC) had spent 110 billion naira ($360 million) on cash calls this month, which dwarfed the country’s 41 billion naira income from oil production over the same period.
NNPC also owes several billion in back debt to oil companies from unpaid cash calls, which oil worker unions say is stalling the creation of jobs and investment.
“We are already working to see how we can get out of the cash calls. And that is very fundamental to the economy,” Adeosun told a press conference.
“We are working with the Ministry of Petroleum Resources and NNPC … that’s a long-term plan: To allow those joint ventures to borrow money that they need rather than taking money out of the federation account.”
Sub-Saharan Africa’s largest economy is trying to boost tax revenues and the non-oil income to fund a record $30 billion 2016 budget aimed at reviving the West African country that has been hit by lower oil prices.
Adeosun told Reuters in April the government was thinking of forcing the cash calls, which are for international and local joint venture partners, out of budget funding and into so-called modified carrier arrangements.
Modified carry agreements are loans provided by large international oil companies to the NNPC for investing in oil exploration and production projects.