President Buhari plans another trip, seeks billions in loans to fund budget

– Buhari will visit China next month

– The purpose of the trip is signing loan to fund budget

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.

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“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.”

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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.

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