Nigeria: Buhari Seeks Approval for Fresh N2.3tr Loan

Lagos, Nigeria

President Muhammadu Buhari has asked the National Assembly to approve a new N2.3 trillion ($6.18 billion) external borrowing.

Buhari's letter was read by the Presiding Officers, Senate President Ahmad Lawan and House of Representatives Speaker, Femi Gbajabiamila during resumption of plenary on Tuesday. In the letter dated May 6, 2021, Buhari said the loan request was to part-finance the budget deficit of N5.602 trillion in the 2021 Appropriation Act.

The fresh loan request is coming barely a month after the Senate, in April 2021, approved $1.5bn and €995 million external borrowings for the federal government. They were part of the $5.5bn and €995mn external borrowings the president had requested in May 2020 to finance priority projects.

Buhari said the N2.3tr loan would be sourced from multilateral and bilateral lenders, as well as from the International Capital Market (ICM) through the issuance of Eurobonds.

"We estimate that Nigeria may be able to raise USD 3 billion or more, but not more than USD 6.183 billion (the amount provided in the 2021 Appropriation Act) in a combination of tenors between 5 - 30 years."

He said the new loan will be used to fund specific capital projects in the budget. "This includes 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."

Similarly in another letter, President Buhari also asked the National Assembly to approve donor fund projects under the 2018-2020 Federal Government External Borrowing (Rolling) Plan amounting to $36,837,281,256 plus Euro 910,000,000 and Grant Component of $10,000,000.

The Debt Management Office (DMO) yesterday said the N2.343tr was part of the 2021 appropriation act but was presented to the National Assembly for the fulfilment of Sections 21 and 27 of the Debt Management Office (Establishment, Etc.) Act, 2003.

In a statement, it said: "Accordingly, the new capital raising has already been approved and is now being presented to NASS in order to fulfil the provisions of Sections 21 and 27 of the Debt Management Office (Establishment, Etc.) Act, 2003."

Meanwhile, DMO had in a March 16, 2021 statement, said as of December 2020, Nigeria's public debt was N32.9tr, or $86.3bn. The figures include the Debt Stock of the Federal and State Governments, as well as, the Federal Capital Territory.

Of this amount, N12.7tr ($33.3bn) was borrowed from external sources, while about N20.2tr ($53bn) was domestic debt.

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