The Nigeria Senate on Wednesday approved the foreign loan plans of President Muhammadu Buhari, in which he sought to borrow the sum of $16.2bn, €1,02bn and a grant component of $125m to fund what he described as “legacy projects.”
Nigeria’s debt stock of N35.5tn will now rise to N42.7tn following the Senate’s approval of the Federal Government’s request for $16bn and €1.02bn fresh loans.
Using the Importers and Exporters’ Window exchange rate of N411.24/$1, the $16.2bn loan is equivalent to N6.7tn, while the €1.02bn is equal to N485.5bn using the Central Bank of Nigeria’s exchange rate of N476/ €1, and will bring the value of the loans to be acquired to N7.2tn.
The Senate also approved the request of the Bank of Industries for the issuance of €500m, but not more than €750m Eurobond in the international capital market.
However, the loan requests approval was accompanied by a resolution that the terms and conditions of the loans from the funding agencies be forwarded to the National Assembly prior to their execution for approval and proper documentation.
The approval followed the consideration of a report by the Senate Committee on Local and Foreign Debt on the proposed 2018-2020 External Borrowing (Rolling) Plan.
While presenting Buhari’s request, the Chairman of the committee, Senator Clifford Ordia, said the request was in compliance with the provisions of the Debt Management Office (Establishment) Act, 2003 and the Fiscal Responsibility Act, 2007.
According to Ordia, the provisions of the statutes enjoined the President to seek and obtain the approval of the National Assembly in respect of the external borrowing programme of the federation and states.
Ordia explained that out of the total amount approved by the National Assembly, $3,529,300,000 would be sourced from the World Bank.
He said $5.07bn would be sourced from the China Exim Bank; and $3.9bn from the Industrial and Commercial Bank of China.
He said $2.8bn was being expected from the China Development Bank; and $698m from the Africa Development Bank.
Adding that €345m was being expected from the French Development Agency; €175m from the European Investment Bank; and $190m from the European ECA/KfW/IPEX/AFC.
The lawmaker also said €500m would be sourced from the international capital market; and $62.1m from Standard Chartered Bank/SINOCURE.
The Senator however explained that the committee noted the serious concerns of Nigerians about the level and sustainability of the country’s borrowing in the last decade.
He said Nigeria’s debt figures, which continue to increase, reached an all-time high of around 95 per cent of retained revenue and 35 per cent of its annual expenditure.
Ordia said the development constituted a drain on the nation’s economy and limited resources available for national development.