Nigeria: Senate approves Buhari’s request for external loan of 1.5 billion dollars, 995 million euros

In May last year, Mr Buhari sought Senate approval for loans to enable the government to fund the 2020 budget deficit, critical projects and support some states in the federation.

The Senate on Tuesday approved $1.5 billion and €995 million in external loan requests from the president.

The approval followed consideration of the report of the Senate Committee on Local and Foreign Debts presented by its chairman, Clifford Odia (PDP, Edo Central).

President Muhammadu Buhari had in May 2020, sent a letter to the Senate asking for its approval for another batch of external loans to allow the administration to finance the 2020 budget deficit, “critical projects” and to support certain states of the federation.

The federal government said “the loans will be used to execute priority projects and help state governments stimulate their economies, which have been hit hard by the COVID-19 pandemic.”

In his presentation, Mr. Ordia noted that the borrowings are largely concessional loans with low interest rates and a reasonable moratorium and repayment period.

“No unusual or onerous conditions are attached and the terms of the loans do not in any way compromise the sustainability of the Nigerian economy or call into question the integrity and independence of Nigeria as a sovereign nation,” a- he declared.

“The loan is in the immediate interest of the Nigerian state and its citizens to address the COVID-19 pandemic in such a way that the economy is positioned for a rapid recovery and renewed growth.

“While Nigeria’s total public debt stock is on the rise, it is still relatively low relative to the country’s GDP and the increase in borrowing requirements is necessary to support economic recovery.”

The approved loans are as follows:

– $750 million from the World Bank’s Fiscal Transparency, Accountability, and Sustainability (SFTAS) program to provide budget support to states.

– $750 million from the World Bank for the COVID-19 Action Recovery and Economic Recovery program to support state-level efforts to protect livelihoods, ensure food security and stimulate economic activity (N- CARES).

– €671 million, €324 million and €995 million from the Export-Import Bank of Brazil (BNDES) and Deutsche Bank of Germany for the Green Imperative to improve the mechanization of Agriculture and Agro Progress in Nigeria (GIP).

This brings the total loans approved to $1,500,000,000 and €995,000,000.

The panel added that GIP funding, additional funding for SFTAS and CARES come from global multilateral and bilateral lenders – and partners with a proven track record of providing financial accommodation and support in Nigeria.

Experts have expressed concern as Nigeria’s debt profile continues to rise over the years.

In addition to borrowing to finance the budget and “boost” the economy, the country plans to sell some national assets to raise funds. Nigeria is also considering borrowing money from dormant bank accounts and retirement savings, even as it tightens its tax revenue streams.

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