FEC Greenlights $1B AfDB Concessional Loan for Budget Support

The Coordinating Minister of the Economy and Minister of Finance, Wale Edun, announced that the Federal Executive Council (FEC) has given its approval for a concessional budget support finance of $1 billion from the African Development Bank (AfDB). This revelation came after the 4th Federal Executive Council Meeting chaired by President Bola Ahmed Tinubu at the Presidential Villa in Abuja on Monday.

Edun highlighted that the AfDB granted the $1 billion support with 25 and eight-year moratoriums, acknowledging the macroeconomic efforts made by the Tinubu-led government to achieve macro stability, restore revenue, and improve the foreign exchange situation.

“The reward, as far as the African Development Bank, a concessional financing organization, was to provide $1 billion in general budget support,” explained Edun.

In addition to the concessional budget support, the FEC approved measures to reduce the interest rates on current outstanding debts. A total limit of N2 trillion was sanctioned for the Ministry of Finance, aimed at bringing down interest rates on existing debt. Edun emphasized that this move could lead to savings of N50 billion or more in debt servicing over time by replacing expensive debt refinancing with more affordable 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,” said Edun.

The funds allocated for Abia State were also addressed by Edun. The FEC approved funds to be lent to Abia State for waste management and the rehabilitation of roads in Umuahia and Aba. This financing includes $100 million from the African Development Bank and $15 million from the Canada-African Development Bank Climate Fund. Edun clarified that this financing had been processed before the current administration and was inherited by the government.

“Essentially, it is concessional borrowing, around 4.2% per annum by Abia State, through the federal government,” stated Edun.

In summary, the FEC’s recent approvals encompass a $1 billion concessional budget support finance from the AfDB, a N2 trillion limit to reduce interest rates on existing debts, and funds allocated for Abia State’s waste management and road rehabilitation projects. These decisions reflect the government’s commitment to economic stability, debt management, and infrastructure development.