Senate approves Buhari’s fresh $8.325b, €490m external loans request

Written by on July 16, 2021

The Senate, yesterday, approved President Muhammadu Buhari’s request for ongoing external loans to the tune of $8,325,526,537 and €490,000,000 (Euros) under the 2018-2020 External Borrowing (Rolling) Plan. The approval followed the consideration of a report on the 2018-2020 External Borrowing (Rolling) Plan by the Committee on Local and Foreign Debt.

Nigeria’s debt profile has continued to rise as the government continues to seek borrowings to meet annual budget deficits. According to the Debt Management Office (DMO), Nigeria’s total public debt stock stood at N32.92 trillion ($86.39 billion) in 2020, compared to N27.40 trillion ($84.05 billion) in 2019, representing an increase of 20.12 per cent in Naira terms.

This has, however, moved to N33.107 trillion as of March 31, 2021, and excludes the Senate’s previous approval of the Federal Government’s borrowing of $2.18 billion in May, $6.1 billion last week, and another $8.3 billion-plus €490 million yesterday.

Chairman of the Committee, Senator Clifford Ordia, in his presentation, said the Committee noted with utmost importance, the genuine and very serious concerns of Nigerians about the level and sustainability/serviceability of the country’s borrowings in the last decade.

According to the lawmaker, “Nigeria’s debt service figures constitute a huge drain on our revenue to the extent that it accounts for over 30 per cent of our expenditure in the annual budget.”

He explained that due to the shortfall in the country’s yearly revenues in relation to the need for rapid infrastructural and human capital development, “we have had to pass deficit budget every year, requiring us to borrow to finance the deficit in our budget.”

Ordia noted that out of the total borrowing request of $36,837,281,256 contained in the re-forwarded request of Mr. President, a sum of $26,154,536,533 is for funds proposed to be borrowed from various financial institutions from the Peoples Republic of China.

He stressed that the proposed projects are domiciled in the Ministries of Transportation, FCT, Aviation, Works & Housing, Agriculture and Water Resources and some commissions such as National Universities Commission, North East Development Commission and the National Identity Management Commission, and they are mostly ongoing projects and programmes in respect of which externally borrowed funds have been spent in the past, including loans.

“These projects have a great multiplier effect on stimulating economic growth through infrastructure development, job creation and poverty alleviation, stimulation of commercial and engineering activities and the consequent tax revenues payable to government as a result of these productive activities,” Ordia explained.

The funding agencies are: World Bank – $796,000,000; China Exim Bank – $2,901,026,509; Industrial Commercial Bank of China – $2,484,555,304; African Development Bank -$104,200,000; Africa Growi ng Together Fund – $20,000,000; French Development Agency – €240,000,000; European Investment Bank – 250,000,000; European ECA/KfW/IPEX/AFC – $1,959,744,724; and International Fund For Agricultural Development (IFAD) – $60,000,000.

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