The Nigerian Senate has approved the $5.513bn external borrowing request by President Muhammadu Buhari. The lawmakers approved the president’s request after the consideration and adoption of the report of the Senate Committee on Local and Foreign Debts.
The Chairman of the Committee, Senator Clifford Ordia (PDP – Edo Central) said the Federal Government would source $3,400,000,000 at one percent interest rate from the International Monetary Fund (IMF) for Rapid Financing Instrument to part finance the 2020 proposed revised budget.
Mr Ordia said that the Federal Government would also source the sum of $1,500,000,000 from the World Bank for Development Policy Financing of the revised 2020 budget at 2.38 percent interest rate; and another $500,000,000 from the African Development Bank (AfDB) for COVID-19 crises response budget support operation to finance revised budget deficit at 1.315 percent interest rate.
The Islamic Development Bank (IsDB) plans to lend $113,000,000 to the Federal Government of Nigeria to finance part of the 2020 revised budget deficit at 0.4 percent interest rate.
In its report, the committee observed that revenue projections contained in the Appropriation Act of 2020 was adversely impacted by revenue shortfalls due to the COVID-19 pandemic, leading to dwindling government revenues from a drop in oil sales and global prices.
According to the committee’s report, “the Appropriation Act (Amendment) Bill 2020 contains a revised total budget of N10.594 trillion with a deficit of N4.563 trillion which will be part financed by proposed domestic borrowing of N2.188 trillion and external borrowing of N1.984 trillion.”
The report further stated that the Local and Foreign Debts Committee, in agreement with the attending Ministries, Departments and Agencies of Government (MDAs), agreed to “conclude the consideration of the other two outstanding components of Mr. President’s External Borrowing request relating to Funding of Priority Projects of the Federal Government to be captured in the Budget estimates for 2021 and Facilities to support State Government to face the challenges of the COVID-19 pandemic.”