FG will continue to borrow from foreign countries for three years! Read why!

The Federal Executive Council has approved the borrowing of money externally by the federal government for the next three years.

This approval was granted at the FEC meeting which took place on Wednesday, June 15 and headed by Professor Yemi Osinbajo.

Vanguard reports that the council also approved the review of debt management strategy for the three-year period

as a way of salvaging the economy.

Mrs. Kemi Adeosun who is the minister of finance disclosed this at the end of the FEC meeting in Abuja.

She said it was necessary to stimulate the private sector and financial institutions too.

She said: “We would need to be borrowing. We need to borrow at the most cost effective rate and at the most cost effective and beneficial terms. And also the government recognizes that there is a need to stimulate the private sector, for the private sector to really grow banks must lend to the private sector so, we don’t want government borrowing crowding out the private sector.

“Government had taken a strategic decision that where possible, we would borrow more externally. That is the external debts in dollars or in any other currencies because the interest rates are cheaper, the tenures are longer and there is more room for banks to lend to the private sector especially SMEs. So the strategy was approved by FEC after much debate.”

Meanwhile, the Central Bank of Nigeria officially announced  a new foreign exchange policy and has listed some implications of new development.

The implication of this is that the Nigerian currency has been floated and that there will be a single market for acquisition of the foreign currency.