14 November 2017

Nigeria: Senate Approves Buhari's U.S.$5.5 Billion Loan Request

The Senate on Tuesday approved a $5.5 billion external loan request by President Muhammadu Buhari.

The president had in a letter on Tuesday October 10 sought the Senate's approval for $3 billion external loan and $2.5 billion Eurobond or Diaspora bond in the international market.

Mr. Buhari explained that the bonds would be channelled towards funding of the 2017 budget while the loan would be used in refinancing of maturing domestic debts.

The Committee on Local and Foreign Debts had on October 19 invited the Minister of Transportation, Rotimi Amaechi, and some other members of the executive to explain the benefits of the loan.

Presenting the report of the committee Tuesday, Shehu Sani, Kaduna-APC, said the projects for which the loan is requested, will stimulate economic development and create direct and indirect jobs for Nigerians while the $2.5 billion bonds will create more borrowing space for the private sector.

He said, "The terms and conditions of the loans are favourable and do not pose any compromise to integrity, independence and interest of Nigerians and its citizens. The projects when completed will create jobs through exchange of downstream economic activities."

"The construction of the second runway of the Nnamdi Azikwe International Airport will enhance safety of the air passengers, increase the use of the airport by international airlines thus increase the revenue base of the country.

"The rail projects, when completed, will reduce the use of roads, its attendant congestion and thus minimise the cost of road maintenance.

"The Mambilla hydro-power project which had now been abandoned, when completed, will add substantially to the national grid thus improve the power output of the country.

"The $3 billion for refinancing of the nation's domestic debts will not lead to an increase in the public debt portfolio. However, it will reduce the cost of the debt. The proposed refinancing of the nation's domestic debts with this relatively cheaper and long term will create a significant decrease in the cost of financing the nation's debt stock while creating more borrowing space in the domestic market for the private sector from."

Gbenga Ashafa, Lagos-APC, praised the executive for the choice of projects the loan was requested to finance.

"If we consider the projects that these loans are proposed to cover, you will all agree that they are spread across the geo-political zones of Nigeria.

"Again, if we single them out, they cover power, rail, roads, even building bridges across the various water channels and the issue of the second run way. This Senate is known to be working together for the benefit of all Nigerians. I believe that we should give the opportunity of borrowing these loans to the Federal Government so that we will turn Nigeria to a construction site all over the zones."

In his comment, the Senate Leader, Ahmed Lawan, lauded the executive and the Senate for their cooperation in approval of the loan.

"For us in the Senate, we have taken our time to look at the necessity and the imperative for approving the loan. The executive has tried also to comply with laws that govern the seeking approval for loans," he said.

"Times were when the executive could have spent or collected this loan without recourse to the National Assembly. Mr. President, these are infrastructural projects that will have very positive impacts on the economy."

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