President Muhammadu Buhari is set to visit China next month to sign $2 billion loan to fund the national budget.
Chinese TV’s website, cctv-africa.com reports that before Buhari’s departure a finance team led by the finance minister Kemi Adeosun, will negotiate the loan.
The report said: “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.”
President Buhari declared plans to increase spending by 20% in 2016 in his first budget presented in December. The leader of the nation said the country would seek overseas funding of 900 billion naira ($4.5 billion), on top of 984 billion naira ($4.9 billion) at home to cope with a increasing deficit, which is expected to double to 2.2 trillion naira ($11 billion) in 2016.
Nigeria has been hit hard by the declining price of oil, which has fallen from $64 a barrel when Buhari was inaugurated in in May 2015 to $32 in January.
If talks with China or multilateral agencies fail, Nigeria would struggle to find willing commercial lenders.