With deteriorating naira, falling external reserves, coronavirus pandemic and lowering crude oil prices, the Federal Government has retreated from its plans to borrow more than half of the N1.595 trillion meant to fund part of its 2020 budget deficit externally.
According to the 2020 budget, N850 billion of the amount was to be sourced from abroad mainly through eurobond issuance. The remaining N794.99 billion was to be sourced domestically.
However, “with the coronavirus pandemic and its attendant effect on the world economy and the international capital market, the Federal Government reappraised its borrowing plans and decided that it would be more expedient to raise the N850 billion, earlier approved as external borrowing, from domestic sources.
“This conversion from external to domestic is to ensure that the implementation of the 2020 Appropriation Act is not jeopardised by lack of funds,” Debt Management Office (DMO) said in a statement on Tuesday.
The statement explained that the N850 billion borrowing approved by the Senate on Tuesday was not new or incremental borrowing.
“Rather it is an amendment of the source of borrowing from external to domestic.
“With this change, the total new domestic borrowing under the 2020 appropriation becomes N1,594.99 billion which is the same as the total New Borrowing in the 2020 Appropriation Act.
“For compliance with the law, President Muhammadu Buhari forwarded requests to the Senate and House of Representatives to convert the source for raising the N850 billion from external to domestic.
“Senate approved the request on Tuesday while the approval of the House of Representatives is expected.
“Upon approval of the request by the House of Representatives, the Debt Management Office will issue FGN Securities in the domestic market to raise the N850 billion, thereby providing high-quality investment opportunities for the investing public,” the statement added.
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