Senate Authorises Buhari to Borrow $8.3bn, €490m

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By Aduragbemi Omiyale

President Muhammadu Buhari has been authorised by the Senate to go ahead with his plan to borrow $8.3 billion and €490 million from external sources.

The external loans are captured under the 2018-2020 External Borrowing (Rolling) Plan of the federal government.

Business Post reports that the government of Mr Buhari intends to take €250 million from the European Investment Bank and €240 million from the French Development Agency.

As for the Dollar loan, the government intends to approach the China Exim Bank for $2.9 billion, $2.5 billion from the Industrial Commercial Bank of China, $2.0 billion from the European ECA/KfW/IPEX/AFC, $796.0 million from the World Bank, $104.2 million from the African Development Bank (AfDB), $60.0 million from the International Fund for Agricultural Development (IFAD), and $20.0 million from Africa Growing Together Fund.

At the plenary on Thursday, the Chairman of the Senate Committee on Local and Foreign Debt, Mr Clifford Ordia, presented the report of his team on the 2018-2020 External Borrowing (Rolling) Plan.

In his presentation, he said the committee observed that in order to boost the economy and make Nigerians enjoy the dividends of democracy, there was the need to seek funds from various sources to develop the country’s infrastructure.

According to him, for rapid infrastructural and human capital development, the nation must request financial support from external sources as the revenue generated by the country was not enough to do the magic.

He said this was the reason for the government to always fund the budget deficits through borrowings almost every financial year.

Mr Ordia admitted that the debt service burden of Nigeria was constituting “a huge drain on our revenue to the extent that it accounts for over 30 per cent of our expenditure in the annual budget.”

However, he stressed that borrowing to put projects in place to stimulate the economy was a very good one, noting that they (projects) “have a great multiplier effect on stimulating economic growth through infrastructure development, job creation and poverty alleviation, stimulation of commercial and engineering activities, and the consequent tax revenues payable to government as a result of these productive activities.”

He stressed that the proposed projects in the Ministries of Transportation, FCT, Aviation, Works and Housing, Agriculture, Water Resources and some commissions were mostly ongoing projects and programmes in respect of which externally borrowed funds had been spent in the past, including loans.

The lawmaker said out of the total borrowing request of $36.8 billion contained in the re-forwarded request of Mr President, $26.2 billion is for funds proposed to be borrowed from various international financial institutions, including from China.

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