The Senate on Wednesday approved the request of the President, Major General Muhammadu (retd.), to borrow N2.34tn to finance part of the 2021 federal budget of N13tn.
The Senate resolution following the approval of its Committee on Local and Foreign Loans was presented by the chairman, Clifford Ordia.
The committee recommended that the Senate approves Buhari’s request for the issuance of $3bn but not more than $6.18bn Eurobond in the International Capital Market.
The external borrowing of N2.34tn, according to the panel, should be for the financing of part of the deficit authorised in the 2021 Appropriation Act.
The committee also recommended that the Senate should approve that the amount authorised may be raised from multiple sources such as the International Capital Market and any other multilateral or bilateral sources as may be available.
It also recommended that the Senate should direct the Minister of Finance, Budget and National Planning, the Director General of the Debt Management Office and the Governor the Central Bank of Nigeria to submit to the National Assembly within 10 working days (excluding the day of close of trading) a letter containing the United State Dollars amount so raised and received as a result of the above approval together with the applicable exchange rate.
Ordia said that in considering the president’s request, the committee noted the serious concerns of Nigerians about the level of sustainability and servicing of Nigeria’s external borrowing.
He said, “Due to the shortfall in our annual revenues in relation to our need for rapid infrastructural and human capital development, we had to pass deficit budget every year requiring us to borrow to finance the deficit in our budget.”
Ordia explained that the new borrowing was calculated at exchange rate of $1/N379, and raised from multiple sources – multilateral and bilateral lenders through the issuance of Eurobonds in the International Capital Market.
He emphasised that the proceeds of the $6.183bn would be used to fund various specific capital projects specifically from priority sectors of the economy namely; Power, Transportation, Agriculture, and Rural Development, Education, Health, Provision of counterpart funding for Multilateral and Bilateral Projects, Defense and Water Resources.
President of the Senate, Ahmad Lawan, advised the Federal Government to sustain adequate funding of security agencies in the 2022 budget to be presented to the National Assembly later this year.
He said doing so remained a sure way to overcome the lingering security challenges faced by the country.
He explained that the amount passed in the supplementary Appropriation Bill 2021 was for the purpose of tackling insecurity across the country and procuring COVID-19 vaccines for Nigerians.
He said, “This supplementary budget is targeted at addressing the security challenges in this country and, of course, the procurement, administration and management of the Covid-19 vaccines.
“We expect the relevant committees to be stiff, to be alive to their responsibilities for over sighting on how these funds would be deployed prudently.”
However, a Civil Society Organisation, Niger Delta Budget Monitoring Group in collaboration with an English non-governmental organisation, OXFAM, told the Federal Government to be cautious of being over-dependent on loans to finance its budgets.
The group’s position was contained in a communique issued after a two-day advocacy roundtable on civic inclusion, budget monitoring, transparency, accountability, gender inclusion and alliance building held in Uyo, the Akwa Ibom State capital.
The communiqué signed by its drafting team, Ebere Chikezie, Stive Obodoekwe Adeyemi Folake and Titilayo Sarakiri, noted that excessive loan acquisition was mounting unbearable pressure and further impoverishing Nigerians.