Nigeria: DMO Clarifies N2.343trn New Loan Request

The federal government yesterday issued further statement in clarification for the plan to raise fresh N2.343 trillion from the external market

The Debt Management Office (DMO) in a statement yesterday said the letter to the National Assembly was to enable the implementation of the new external capital raising of the N2.343 trillion (approximately $6.183 billion at the budget exchange rate of $1/N379) included in the 2021 Appropriation Act.

"The proposed new capital raising, is the new external borrowing provided in the 2021 appropriation Act to part finance the deficit in the Budget," the debt office said, adding that "In other words, the new capital raising has already been approved in the Budgetary Process by the Executive and Legislative arms of Government."

The aim was to clear the ambiguity caused by misleading information in public domain on the government's borrowing plan, the DMO said in a statement yesterday.

The perception had been that the federal government was going for a borrowing of fresh money (outside the approved borrowing for financing of the 2021 budget) to pile up the nation's debt stock.

But the DMO says President's request to the NASS is simply to comply with the provisions of sections 21 and 27 of the Debt Management Office (Establishment, Etc.) Act, 2003.

The explanation also includes the promise that the proceeds of the new capital raising would be deployed to capital projects in various sectors of the economy including power, transport, agriculture and rural development, education, health and water resources that are specified in the 2021 Appropriation Act, thus, enabling the implementation of the Act and the achievements of its objectives.

Nigeria's 2021 signed budget has overall budget deficit of N5.60 trillion, representing 3.93 per cent of the nation's gross domestic product (GDP).

Meanwhile, minister of finance, budget and national planning, Zainab Ahmed has stated that the budget deficit is to be financed mainly by borrowings. According to the minister, N2.34 trillion would be borrowed from domestic sources, while N2.343 trillion would be sourced from foreign market. Expected multi-lateral/bi-lateral loan draw-downs are put at N709.69 billion, with estimated privatisation proceeds of N205.15 billion.

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