…as MDAs slow to defend proposals
The Presidency on Wednesday sought the approval of the National Assembly to raise additional $500 million Eurobond from the international capital market.
The fund, according to Acting President Yemi Osinbajo, is required to finance the total sum of N4.023 trillion budget deficit in the 2016
and 2017 fiscal years respectively.
Meanwhile, there are strong indications that the passage of the 2017 budget will be delayed this year, as was the case last year, despite assurances by Bukola Saraki, President of the Senate, that lawmakers will conclude the appropriation process three weeks after they resume plenary on Tuesday.
This is because some of the Ministries, Departments and Agencies (MDAs) particularly, the Ministry of Foreign Affairs, the Independent National Electoral Commission (INEC), Economic and Financial Crimes Commission (EFCC) and many others, are yet to defend their budget proposals.
On the proposal to raise additional $500million Eurobond, Osinbajo said in the two-page letter read by Speaker Yakubu Dogara at the House of Representatives and also presented to the Senate, that government intends to leverage the present favourable market conditions to issue the Eurobond debt instrument to fund the implementation of the 2016 budget, which is still ongoing.
“The Rt. Honourable Speaker may wish to refer to line items 229 and 244 of the 2016 Federal Government of Nigeria (FGN) Appropriation Act,
which provided for a deficit of N2.205 trillion and new borrowings of N1.818trillion respectively.
“The Act also provided for Domestic Borrowing of N1.182 trillion and external borrowing of N635.88 billion in line items 245 and 246
respectively.
“Following the high oversubscription of the recent USD 1 billion Eurobond issuance, we wish to take advantage of favourable market conditions to issue a Eurobond debt instrument of USD 500 million to
fund the implementation of the 2016 budget, which is still ongoing.
“The Rt. Honourable Speaker may wish to note that in line with the requirement of securities issuances in the ICM, a specific resolution of the National Assembly, as a firm confirmation of the approval of
the Legislature for the Federal Government of Nigeria (FGN) to borrow the USD 500 million through the issuance of a Eurobond debt instrument
in the ICM is required,” the Acting President noted in the letter which he sent to the Parliament.
He assured that the proceeds of the Eurobond will be used as funding sources to finance the budget deficit, including capital expenditure projects as specified in the 2016 Appropriation Act.
On the terms and conditions of the eurobond, Osinbajo said this may only be determined at the point of issuance being a market-based instrument.
“It is important to note that the previous issuances of USD 500 million, USD 1 billion (consisting of two tranches of USD 500 million) and USD 1 billion in January 2011, July 2013 and February 2017,
respectively, were issued at coupons of 6.75%, 5.125%, 6.375% and 7.875% based on the prevailing market conditions.
“The Debt Management Office and the Federal Government’s appointed Transaction parties to the issue are committed to working assiduously
to secure the best terms and conditions for the Federal Republic of Nigeria,” he stressed.
According to the Acting President, the Federal Government planned to issue the Eurobond between February and March 2017, subject to market
conditions, in order to meet the Government’s approved capital expenditure funding plan.
To this end, Osinbajo solicited for brisk action towards the passage of resolution of both chambers of the National Assembly.
Meanwhile, concerning the slowing down of the passage of the 2017 budget, on Tuesday, the budget defence by the Ministry of Foreign Affairs was postponed till Wednesday, due to the absence of Ahmed Idris, the Accountant-General of the Federation.
Finance Minister, Kemi Adeosun, is expected to appear before the Senate Committee on Housing over N2billion padded into the budget of
the Ministry of Power, Works and Housing.
Furthermore, the EFCC is expected to reappear before the Senate Committee on Anti-Corruption and Financial Crimes next week, to furnish the panel with details of the performance on capital
expenditure for last year, as well as information on all recoveries made by the agency till date.
The Senate had suspended plenary on January 26 to enable MDAs defend their budgets before their
respective sub-committees. The report of the sub-committees is supposed to be the basis for budget debate by the larger house.
Saraki had assured that the N7.298trillion 2017 budget would be passed three weeks after resumption from recess on Tuesday.
Persons familiar with the process, however say that this may not be feasible, given that budget defence is still going on both at the Senate and the House of Representatives.
Questions are still being raised about the quality of budget defence this year, as most sub-committees gave assent to the submissions of MDAs without thorough scrutiny. Contrary to the norm, others held their budget defence sessions behind closed doors,
possibly for fear of backlash from the media and the larger public.
A source in the National Assembly told BusinessDay that the secret budget defence is linked with the controversy surrounding last year’s
budget, which was earlier declared ‘missing’ and enmeshed in padding allegations.
Although this year’s budget, unlike the 2016 one, is not yet enmeshed in controversy, it still contains frivolous, inappropriate, unclear and wasteful expenditure, as is being revealed during the defence.
Lead Director, Centre for Social Justice, for instance ,indicted 64 MDAs for what he called ‘inappropriate, unclear line items’ totalling N151,536, 674,923.
BusinessDay gathered that sub-committees are yet to submit their reports to the Appropriations Committee, which will in turn scrutinise
the documents and present its report to the Senate, for consideration and passage.
The leadership of the Senate called a meeting with chairmen of committees on Tuesday because the sub-committees could not meet the target of submitting their report to the Appropriations Committee upon resumption Tuesday.
