Nigeria Senate on Wednesday approved a $6.1 billion loan request by President Muhammadu Buhari.
The $6.1 billion loan request, which is equivalent to about N2.343 trillion, was approved after the Senate considered the report of the Senate Committee on Local and Foreign Debts.
The Senate resolution followed the approval of its Committee on Local and Foreign Loans as presented by the Chairman, Clifford Ordia.
The Committee recommended that the Senate approves Buhari’s request for the issuance of $3,000,000,000 but not more than $6,183,081,643.40, Eurobond in the International Capital Market.
The External Borrowing of N2,343,387,942,848, 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 go ahead to approve the amount authorised as it also said the amount 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 directs the Minister of Finance, Budget and National Planning, the Director-General of the Debt Management Office, and the Governor of the Central Bank of Nigeria to submit to the National Assembly within 10 working days (excluding the day of the 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.
Buhari in May said the loan will be raised from multilateral and bilateral tenders as well as the international capital market.
He also disclosed that the National Assembly already approved the borrowing of N4.6 trillion in the 2021 Appropriation Act. And that the new borrowing of N2.3 trillion will part-finance the deficit in the 2021 budget.
Senator Ordia said the request is not new as it was approved in the borrowing plan when the national assembly passed the 2021 budget.
“What we are about to pass is not a new borrowing, it has been approved in the 2021 budget,” Ordia said.
After the approval, the Senate President, Ahmad Lawan, said the National Assembly must make sure that there are no frivolous expenditures by the executive.
“Let me thank the committee, this is not a new loan. This is a borrowing plan we have approved. What we have done is to provide the necessary resolutions for the implementation of it,” Lawan said.
“Every cent counts. Our committees must be alive to oversee it. No frivolous expenditures should be entertained.”
Nigeria’s 2021 budget already has a deficit of N5.6 trillion.
Buhari said the loan will be used to fund “projects from priority sectors of the economy namely: Power, Transportation, Agriculture and Rural Development, Education, Health, provision of Counterpart Funding for Multilateral and Bilateral Projects, Defence and Water Resources.”
Amidst Nigeria growing debt profile, Buhari said the measure was necessary due to the “existential challenge of Coronavirus pandemic and its aftermath; I believe that this provides a justification to exceed the threshold as provided for by this law.”