Nigerian leader seeks Senate approval for over $5bn foreign loan
APA – Lagos (Nigeria) - President Muhammadu Buhari has requested Nigeria’s upper legislative chamber, the Senate to approve another foreign loan of $5.5 billion to fund the 2017 budget.
The request is contained in a letter sent to the Senate by Buhari and read by the Senate President, Dr. Bukola Saraki on Tuesday in Abuja.
“Implementation of the external borrowing plan approved in the 2017 appropriation Act. External borrowing to refinance maturing domestic debts through the issuance of $3 billion Euro bond in the international capital market or through a loan syndication,” Buhari said in the letter.
He urged the senate to refer to the 2017 appropriation Act which has a deficit of 2.356 trillion and provisions for near borrowings of 2.321 trillion and that the Act provided for 1.254 trillion and external borrowing of 1.067 trillion (about $3.5 billion) and the issuance of $2.5 billion for financing the 2017 appropriation Act.
“The balance of the 2017 external borrowing in the sum of $3.2 billion is planned to be partially sourced in the ICM of $2.5 billion through Eurobonds or a combination of Eurobonds and Diaspora bonds while $700 billion is proposed to be raised from multilateral sources.
“It should be noted that intention is to issue the Eurobonds first with the objective of raising all the funds through Euro bonds and diaspora bonds will only be issued when the full amount cannot be raised through Euro bonds,” Buhari said.
According to Buhari, the Federal Government planned to substitute domestic debts with “less expensive long-term external debts”.
He explained that the proposed sourcing of $3 billion from external sources to refinance maturing debts will not lead to an increase in public debt profile because debt already exists, rather the substitution of domestic debts with relatively cheaper and long-term external debts will lead to a significant decrease in debt service cost.
This, he noted, will also achieve more stability in the debt stock while also creating more borrowing space in the domestic market for the private sector.
The 2017 budget has a deficit of N2.356 trillion and some financial experts are already expressing worry over the country’s increasing debt stock and advised the government to inject the billions of naira recovered from looters of the economy to fund the budget deficit instead of resorting to foreign loans.