From Fred Itua, (Abuja), Mert Ibe and Chinwendu Obienyi
The Senate, yesterday, approved the request of President, Muhammadu Buhari, to borrow N2,343,387,942,848, to part-finance the 2021 national budget size of N13 trillion. The decision of the Senate, followed a resolution of its Committee on Local and Foreign Loans as presented by the Chairman, Clifford Ordia.
The Committee recommended that the Senate approves Buhari’s request for the issuance of $3,000,000,000 but not more than $6,183,081,643.40 Eurobond in the International Capital Market. The external borrowing of N2,343,387,942,848, according to the panel, should be for the financing of part of the deficit authorised in the 2021 Appropriation Act.
The Committee also recommended that the Senate should approve that the amount authorised maybe raised from multiple sources such as the International Capital Market and any other Multilateral or Bilateral sources as may be available.
It also recommended that the Senate directs the Minister of Finance, Budget and National Planning, the Director General of the Debt Management Office and the Governor the Central Bank of Nigeria to submit to the National Assembly within 10 working days (excluding the day of close of trading) a letter containing the United State Dollars amount so raised and received as a result of the above approval together with the applicable exchange rate. The recent approvals have brought the loans so far approved by the Senate, vis-a-vis, the 9th National Assembly to over N45 billion since June, 2019.
In April, the Senate approved $1.5 billion and €995 million external loan requests of the president. Buhari had also in May 2020, sent a letter to the Senate asking for its approval to access another round of external loans to enable his administration finance the 2020 budget deficit, finance some projects and support some states of the federation.
Meanwhile, the Senate has passed the supplementary budget submitted to both chambers of the National Assembly two weeks ago by Buhari.
Buhari had proposed N895.842,465,917 billion, but the Senate Committee on Appropriation in its report presented by the Chairman, Barau Jibrin, increased the budget size to N982,729,695,343.
The breakdown showed that N123,332,174,164 is for recurrent (non-debt) expenditure while the sum of N859, 397,521,179 is for contribution to the development fund for capital expenditure for the year ending on the 31st day of December, 2021.
Reacting to the fresh loan request, former Governor of Anambra Chukwuemeke Ezeife, said there is no need for so much loan. The effect of the borrowing is going to be negative on the economy
The borrowed money is not producing anything we can see. I don’t even know how the Senate and presidency are sharing the loan. They should not take the loan. Nigeria should stop borrowing.
For David Adonri, CEO, Highcap Securities, “The government has descended into a debt trap and it is very dangerous for us at this moment. It is a calamity that we are borrowing to meet it’s existing debt and borrow to finance the execution of the act. We are tilting towards a debt crisis.