Uwaleke: $3bn External Loan Creates Erroneous Impression of Insolvency on CBN
Ndubuisi Francis in Abuja
A former Commissioner for Finance in Imo State, Prof. Uche Uwaleke has stated that the $3 billion external loans secured for the Central Bank of Nigeria (CBN) creates an erroneous impression of insolvency on the part of the apex bank, and does not represent a positive signal to foreign investors.
The Nigerian National Petroleum Company (NNPC) Limited, had last week secured a $3 billion Emergency Crude Repayment Loan from the African Export-Import (AFREXIM) Bank.
Uwaleke, in a chat with THISDAY noted that in as much as intervention in the foreign exchange market by the CBN was desirable, a more cost-effective option would have been to use what was left of the nation’s external reserves as opposed to taking a loan from Afreximbank or even the International Monetary Fund (IMF).
He said: “The fact that the $3 billion loan was taken by NNPCL, a company still owned 100 per cent by the federal government with the Ministries of Finance and Petroleum Resources holding 50 per cent share each, makes it more worrisome.
“By implication, the federal government that is already saddled with huge debt is borrowing to lend to the CBN, when it should have been the other way round.
“Ultimately, this new loan contracted by the NNPCL adds to the growing public debt and may have been contracted at non concessionary terms being an emergency loan.”
Uwaleke, who is the Director, Institute of Capital Market Studies, Nasarawa State University, Keffi argued that it was important that Nigerians, especially the National Assembly, were informed about the terms of the loan and the collateral security involved.
“Without doubt, this $3 billion loan on the balance sheet of NNPCL will make the company less attractive and possibly jeopardise the ongoing plan to private the company by listing it on the Nigerian Exchange.
“May I add that contracting external loans to lend to the CBN creates an erroneous impression of insolvency on the part of the CBN which is not a healthy signal to foreign investors,” he said.
