The Senate on Tuesday referred the request of President Muhammadu Buhari to borrow N2.343 trillion from external source to the committee on local and foreign debt.
BusinessDay recalled that on May 18, 2021, Buhari sought the approval of the Senate to borrow a fresh N2.343 trillion ($6.18bn) external loan.
The committee was also mandated to look into the request of the president on Donor Fund Projects under the 2018-2020 Federal Government External Borrowing (Rolling) Plan.
The committee was given two weeks to submit its report.
The Senate had in April 2021 approved the sum of $1.5bn and €995 million external borrowings for the Federal Government.
The loans were part of the $5.5 billion and €995 million external borrowings Buhari had, in May 2020, asked the Red Chamber to approve to finance various priority projects of the federal government and to support the state governments facing fiscal challenges.
In the letter titled: ‘Request for the resolution of the National Assembly for the implementation of the new external borrowing of N2.343 trillion about $6.183 billion in the 2021 Appropriation Act’, Buhari hinted that the proposed loan, equivalent of N2.343 trillion, would be used to finance the 2021 budget deficit of N5.6 trillion.
The president also explained that the loan would enable the Federal Government to fund critical infrastructural projects in transportation, health and education among others.
He said the request was in line with the Provisions of Sections 21(1) and 27(1) of the Debt Management Office (Establishment) Act, 2003 (DMO Act).
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Section 21(1) of the DMO states that: “no external loan shall be approved or obtained by the Minister unless its terms and conditions shall have been laid before the National Assembly and approved by its resolution”, while Section 27(1) states that: “the National Assembly may by a resolution approve, from time to time, standard terms and conditions for the negotiation and acceptance of external loans and issuance of guarantees”.
The president recalled that the 2021 Appropriation Act provides for N4,686,775,885,696.00 as new borrowings to part-finance the 2021 fiscal deficit, of which 50 percent or $2,343,387,942,848.00 (about $6,183,081,643.40 at the budget exchange rate of $1.00/N379) is specified as new external borrowing.
He said the allocation of N2.343 trillion to new external borrowing in the 2021 appropriation act was consistent with Nigeria’s debt management strategy, which seeks among other objectives, to moderate debt service costs by accessing relatively cheaper external funds, and to free up space in the domestic market for other borrowers.
Before now, Nigeria’s total debt profile is at N33 trillion.
