By Ignatius Okorocha
The Senate on Tuesday at plenary approved President Muhammadu Buhari’s $5.513 billion external borrowing request.
The approval came following consideration and adoption of the report of the Senate Committee on Local and Foreign Debts.
Giving a breakdown into the sources of the loan request, Chairman of the Committee, Senator Clifford Ordia (PDP – Edo Central) said the Federal Government would source $3,400,000,000 at one percent interest rate from the International Monetary Fund (IMF) for Rapid Financing Instrument to part finance the 2020 proposed revised budget.
According to the lawmaker, the Federal Government would also source the sum of $1,500,000,000 from the World Bank for Development Policy Financing of the revised 2020 budget at 2.38 percent interest rate; and another $500,000,000 from the African Development Bank (AfDB) for COVID-19 crises response budget support operation to finance revised budget deficit at 1.315 percent interest rate.
The Islamic Development Bank (IsDB) is also expected to give a loan of $113,000,000 to the Federal Government of Nigeria to part finance the 2020 revised budget deficit at 0.4 precent interest rate.
The Committee in its report noted that revenue projections contained in the Appropriation Act of 2020 was adversely impacted by revenue shortfalls due to the COVID-19 pandemic.
It further observed that same led to dwindling Government revenue from oil sales as well as sharp drop in global oil prices below $20 (USD).
The Committee noted that as a consequence, the Federal Government found it expedient to seek amendment to the Appropriation Act of 2020 as well as review the 2020-2022 Medium Term Expenditure Framework (MTEF).
According to the report, “the Appropriation Act (Amendment) Bill 2020 contains a revised total budget of N10.594 trillion with a deficit of N4.563 trillion which will be part financed by proposed domestic borrowing of N2.188 trillion and external borrowing of N1.984 trillion.”
The Committee, however, added that the first component of the request of the President to seek the approval of the Senate to embark on external borrowing to the tune of $5.513 billion was to facilitate the financing of the revised 2020 budget deficit.
The Committee stressed that the budget deficit request of the President is aimed at bridging the revenue shortfalls for the 2020 fiscal year and to access immediate funds required to deal expeditiously and decisively with the ravaging impact of the COVID-19 pandemic.
The report further stated that the Local and Foreign Debts Committee, in agreement with the attending Ministries, Departments and Agencies of Government, agreed to “conclude the consideration of the other two outstanding components of Mr. President’s External Borrowing request relating to Funding of Priority Projects of the Federal Government to be captured in the Budget estimates for 2021 and Facilities to support State Government to face the challenges of the COVID-19 pandemic.”