By Ignatius Okorocha
In what appears to be a desperate move to save the country from economic quagmire,the Senate on Tuesday gave accelerated approval to the N850 billion fresh loan request forwarded to it by President Muhammadu Buhari.
Approval for the loan which is to be sourced from the domestic capital market was given in less than five minutes after the request was read to Senators by the President of the Senate, Ahmad Lawan at the resumption of its five weeks Covid 19 emergency recess plenary session.
To achieve the immediate approval of the President’s request, the Senate suspended Order one of its standing rule which stipulates that such request be referred to the relevant committee for thorough parliamentary deliberation.
President Buhari had in a letter to the Senate President stated that “To ensure that there are adequate funds to finance critical projects and programmes in the 2020 budget,I hereby seek the Senate’s approval by resolution to raise the N850 billion of new external borrowing in naira from the domestic capital market instead of from the international capital market”
Buhari lamented the inability of the Federal Government to seek the loan from the international capital market which according to him would have been more beneficial.
He drew the attention of the Senate to provisions in the 2020 National Budget which empowered government to raise the loan to fund the capital budget.
“The Senate may wish to recall that the 2020 Appropriation Act provided for N1,594,986,700,544 of new domestic borrowing and N850 billion of new external borrowing.
These borrowings were to part finance the 2020 budget deficit of 2,175,197,885,232 only.” Buhari stated.
He stated that although “external borrowing from the international capital market increases Nigeria’s external reserves, provides access to lower costs as well as avoids crowding out private sector borrowers who also wish to access the domestic capital market, recent developments in the global economic environment as a result of the Coronavirus pandemic and the decline in international oil prices have made it less attractive to borrow from the international capital markets at this time”
“However, it remains our intention to access the international capital market when conditions improve to refinance this N850 billion of new borrowing and epitomise the benefits inherent in external borrowing”The President added.
According to him, “the conditions in the domestic capital market are favourable in terms of availability of funds and relatively low interest rates. This cause of action is deemed prudent given our current realities.”
Buhari also informed the Senate that he had “directed the Minister of Finance, Budget and National Planning to make herself available to provide any additional information or clarification which you may require.”
However,after the approval by the Senate, Lawan directed the Senate Committee on Finance to liaise with the Minister for budget and National Planning to get further details of the loan.