The Federal Executive Council, FEC has approved a concessional budget support finance of the sum of $1b from the African Development Bank ( AFDB)
The Minister of Finance and the Coordinating Minister of the Economy, Wale Edun made this known on Monday after the 4th Executive Council Meeting, presided over by the President, Bola Ahmed Tinubu at the Presidential Villa, Abuja
Edu disclosed that the bank approved the budget support concessional financing with 25 and eight-year moratoriums in recognition of the macroeconomic measures taken by this administration towards macro stability, restoring revenue, and improving the foreign exchange situation.
“There was the financing of $1 billion, concessional financing, 25 years, eight years moratorium at about the same for 4.2% per annum, which was approved by the African Development Bank for this administration and really, it was in recognition of the macroeconomic measures that have been taken, the swift movement towards macro stability, restoring revenue, improving the foreign exchange situation, and so forth, that have been taken by this government.
The reward, as far as the African Development Bank, a concessional financing organization, was to provide $1 billion in general budget support.”
Edun added that the council also approved a total limit of N2 trillion for the Ministry of Finance to bring down the rate of interest on the current outstanding.
He said it was expected to help save N50 billion or more in debt servicing over time by giving back expensive debt refinancing with cheaper funding.
“In order to keep working hard and maximizing the ability of the government to use the markets and to take advantage of different situations and improve situations, the Federal Executive Council approved a total limit of N2 trillion to be available for use by the Ministry of Finance in order to go in and out of the market and essentially to, where possible, bring down the rate of interest on the current outstanding.
“So, essentially, it will be refinancing and the view is that there will be an opportunity to save about N50 billion or more in debt servicing over time by giving back expensive debt refinancing with cheaper funding,” he added.
The minister also announced the approval of funds to be lent to Abia State for waste management and rehabilitation of roads in Umahia and Aba, in particular.
“There was an inherited financing, an inherited loan processing, which was to do with the $100 million financing from the African Development Bank and $15 million from the Canada-African Development Bank Climate Fund.
“Essentially, it was processed before this administration came in and, so it has been inherited. Essentially, it is concessional borrowing, around 4.2% per annum by Abia State, through the federal government.”
Edun, while speaking on the briefing by the Fiscal Policy and Tax Reform Committee, said the committee which had been working for 90 days, had been in a position to have impacted the economy by coming up with initial reforms and signposting the way forward in terms of important targets.
“So, in a nutshell, the policy on VAT removal on diesel is from them, they are looking to help boost the fiscal situation of the government by increasing revenue, particularly tax revenue, through digitalization, additional efficiency and rationalization of the range of taxes that we have at the moment.