Reps approve $22.799bn external loan, revised 2020-2022 MTEF-FSP amidst protest
• Jerk up crude oil benchmark from $25 to $28 as South-East lawmakers protest exclusion
The House of Representatives on Tuesday approved Federal Government’s request to borrow $22.799 billion external loan and the revised Medium Term Expenditure Framework (MTEF) and Fiscal Policy Paper (FSP), as South-East lawmakers protested exclusion from the new borrowing plan.
Tribune Online reports that the resolutions were passed after the consideration of the reports of the House Committee on Finance and Aids, Loans and Debt Management at the Committee of Supply, where the lawmakers adopted the recommendations to jerk up the crude oil benchmark from $25 to $28 per barrel and retained 1.9 million crude oil production in the revised MTEF/FSP.
Out of the $22.799 billion loan, China Eximbank is to provide a larger chunk of the fund worth $17.066 billion at 20 years maturity, 7 years moratorium, 0.5% management fee, 2.75% interest rate, 0.3% commitment fee and 3-7 years duration.
The World Bank is to provide $2.854 billion at average repayment maturity of between 20 – 25 years, 1.25% interest rate, 0.25% commitment charge, 0.25% front-end fee and five years duration.
African Development Bank is to provide $1.889 billion at average repayment maturity of 20 years, 0.75% service charge, 0.5% commitment charge, five years grace period, 1.127% interest rate and 5-8 years duration.
AfDB to provide $480 million is to provide $480 million at 15-20 years maturity, 4-7 years grace period, 2.6 – 2.9% rate in USD based on Libor floating market rates (1.3% in Euros in Euribomarket rates) depending on loan maturity, 0.5% commitment fee, 0.5% appraisal fee and 5 years duration.
JICA is to provide $200 million at 30 years maturity, 10 years grace period and 1.4% interest rate.
German Development Bank is to provide $200 million at 15 years maturity, five years grace period, 3.99% interest rate, 0.25% commitment fee of the undisturbed amount and 0.4% management fee of the loan.
Islamic Development Bank is to provide $110 million at average repayment maturity of between 25 years, Service Charge not exceeding 2%, 2.5% interest rate and four years duration.
Breakdown of the approved loans include: $350 million World Bank Development Policy Operation loan for Kaduna and $110 million Islamic Development Bank Health Susyems Projects Loan for Katsina State.
The committee, however, observed that out of the total borrowing of $22,898,446,773 as contained in the October 2019 re-forwarded request of President Muhammadu Buhari, a sum of $17,065,496,773 is for funds proposed to be borrowed from China Eximbank Bank.
In a swift reaction to the adopted report on the $22.799 billion external loan, the deputy minority leader, Hon. Toby Okechukwu argued that the “approval of the loan does not mean the expectations of our people.”
He said: “Because first and foremost, there are certain strategic projects that ought to be there. First, the Western Corridor Rail line which goes from Lagos to Kano and the Eastern Corridor Rail line that goes from Port Harcourt through Enugu to Makurdi, Plateau down to Maiduguri. They were established the same day, there were commenced the same day, they were completed the same day they were operating. So to take one in exclusion of the other is not appropriate.
“Secondly, it is an infrastructural sufficient to give impetus to the eastern corridor passing through South-South, South East, North Central and North East. And if you check all these areas what you’ll see, is that we have trouble from Boko Haram to agitations to militancy; we have challenges in these areas and when you don’t undertake economic activities that will improve it, you are not helping.
“So it is our considered opinion that that should have been a priority. We appreciate the effort of Mr Speaker in terms of trying by all means for the past four months to accommodate these Lines but of course, there was no initiation for it and this is where you find out that the budget or loan approval is as good as …but we need to think globally.
“We looked at this as Nigerians and our expectation is that there should have been some more prudence to this effect. So we appreciate the proviso that there should be South-East in the next borrowing plan but it’s a promissory note. If you go to the bank if it’s your bank you’re lucky because it must be initiated, so we felt that this loan approval should have waited until they complete the feasibility so that the South East, North East are sufficiently accommodated.
“It is not there, I need no science yo know that the North-East in the budgetary appropriation and South East, they have always come last in budgetary appropriations. So there are some reasons why those places are restive. So our expectation is what we are borrowing is homologous; we are taking this 22 billion, we are going to take another 4.5 billion to fund the budget, the next season we are going to take another £4 billion for power, so at which point are you going to accommodate the South East. And that is why we said look this is the proper time to do it.
“And it simply because the Executive is not willing. They are not able to do that and at the parliamentary level, we are expecting that at the appropriate level that should have been taken into consideration,” Hon. Okechukwu noted.