Senate approves N2.3 Trillion loan request from Buhari

The Senate has approved a request from President Muhammadu Buhari to borrow N2.3 trillion (about $6.183 billion) to fund the deficit in the 2021 Appropriation Act. 

The development was reached after the report of the Committee on Local and Foreign Debts, chaired by Senator Clifford Ordia (PDP, Edo). 

The Senate approved the president’s request for the issuance of $3 billion but not more than $6.1 billion Eurobond in the International Capital Market for the implementation of the external borrowing of N2.3 trillion to finance part of the deficit authorized in the 2021 Appropriation Act. 

The Red Chamber also approved the committee’s recommendation that the amount be raised from multiple sources such as the International Capital Market and any other Multilateral or Bilateral sources. 

It also directed 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, a letter containing the United State Dollars amount raised and received as a result of the above approval together with the applicable exchange rate. 

Recall that Mr Buhari had in May written the National Assembly for approval to borrow fresh $6.183 billion (N2.343 trillion) to fund the 2021 budget deficit of N5.602 trillion.

The letter titled “Request for the resolution of the National Assembly to the implementation of the new external borrowing of N2.343 trillion, which is about $6.183 billion in the 2021 appropriation Act” and addressed to the Speaker of House of Representatives, Femi Gbajabiamila, the President explained that the fund would be sourced from multiple avenues, including multilateral and bilateral lenders, as well as the International Capital Market (ICM) via issuance of Eurobonds. 

“We estimate that Nigeria may be able to raise $3 billion or more, but not more than $6.183 billion (the amount provided in the 2021 Appropriation Act) in a combination of tenors between five and 30 years ,” Buhari wrote in his letter. 

He explained that the loan would enable the Federal Government fund critical infrastructural projects in transportation, health and education, among others. 

The President’s request for a loan came under criticism from a lot of Nigerians who accused the administration of borrowing too much money. 

According to the Debt Management Office (DMO), Nigeria’s total public debt as of December 31, 2020, was N32.915 trillion. 

In April, the National Assembly approved loan request of $1.5billion and €995million for the Buhari administration.