Senate approves $1bn, €995m external borrowings for FG

The Senate has approved the sum of $1.5bn and €995 million external borrowings for the Federal Government.

The approval was sequel to Wednesday consideration of the report of the Senate Committee on Local and Foreign Debts on the request for approval of External Loans to finance priority projects of the Government and projects to support State Governments.

President Muhammadu Buhari had last May, in a letter addressed to the Senate President, Ahmad Lawan, sought the approval of the lawmakers to borrow about $5.513 billion from external sources.

Investigation revealed that President Buhari in the letter said the external loan was to enable his administration to fund the 2020 revised budget, execute Federal Government’s priority projects and for projects to support state governments in stimulating their economy which has been adversely affected by the COVID-19 pandemic.

The President said the loan to fund the 2020 revised budget was being expected from multilateral institutions like the International Monetary Fund (IMF) $3.4 billion, World Bank $1.5billion, African Development Bank (AfDB) $500million and the Islamic Development Bank (IDB) $113million.

For the Federal Government’s priority projects, the lenders are the AfDB – $125million to strengthen the healthcare system and improve response to COVID-19 and $23 million for financing smallholder farmers to mitigate the food security impact of the COVID-19 Pandemic.

It is also to source $600million from the Islamic Development Bank to support Nigeria’s response to challenges posed by COVID-19 and $500 million from the African Export-Import Bank to provide critical medical supplies to combat COVID-19.

The Federal Government also intends to borrow Euro 995million from the Export-Import Bank of Brazil to support the Green imperative and enhance the mechanisation of agriculture and agro-processing in Nigeria.

Buhari said that the Federal Government was negotiating with the World Bank for between $500million – $750 million for the COVID-19 Action Recovery and Economic Stimulus Program to support state-level efforts to protect livelihoods, ensure food security and stimulate economic activities.

He said that another $500 – $750 million is being negotiated with the World Bank for State Fiscal Transparency and Sustainability Program to provide fiscal support to the states.

Presenting his report, Senator representing Edo central and Chairman, Senate Committee on Local and Foreign Debts, Clifford Ordia, noted that the borrowings were largely concessional loans with low-interest rates and a reasonable moratorium and payback period.

He said: “The Committee most importantly notes that the indicative terms and conditions under which the loan will be borrowed, there are no unusual or onerous conditions attached and the terms do not in any manner compromise the sustainability of the Nigerian economy or impugn the integrity and independence of Nigeria as a sovereign nation.

“The Committee finally notes that the loan is in the immediate best interest of the Nigerian State and its citizens in dealing with the COVID-19 pandemic in a way that the economy will be positioned for quick recovery and resume growth.

“The Committee notes that while Nigeria’s Total Public Debt Stock is on the increase, it is still relatively low vis-d-vis the country’s GDP and the increased borrowing requirements are needed to sustain the economic recovery.”

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