PRESIDENT Muhammadu Buhari has written to Nigeria’s Federal House of Representatives requesting that it grant the executive approval to secure fresh foreign loans of $5.51bn to enable the government fund its 2020 budget.
Following the collapse of the global economy in the wake of the coronavirus pandemic, Nigeria’s economy has virtually collapsed as the country cannot sell crude oil on the international market. As much as 95% of government revenue comes from the export of petroleum products and with a combination of a lack of buyers and a price collapse, Nigeria has been left without any revenue source.
On April 28, the International Monetary Fund (IMF) approved Nigeria’s request for a $3.4bn loan to help ameliorate the effects of the economic collapse brought about by the coronavirus pandemic. Earlier this week, the World Bank offered Nigeria a new loan of $1.5bn, due to be released in late July to augment a recent $3.4bn handout got from the IMF.
Nigeria’s 2020 budget of $28.8bn is predicated on selling 2.1m barrels of crude oil at a minimum price of $57 a barrel. However, with the collapse in both crude oil demand and prices, the government has no choice of generating such funds, so has resorted to borrowing the plug the gap.
Thanks to the IMF and World Bank loans, the total amount Nigeria has borrowed during the crisis has added up to $4.9bn so far. However, this is still not enough to bridge the spending gap, so President Buhari has asked lawmakers to approve further borrowing of $5.513bn.
In the letter read by the speaker of the House of Representatives, Hon Femi Gbajabiamila, President Buhari said the funds were for 2020 budget deficit, the financing of critical projects and funding some states of the federation. Also, in the letter, the president presented a revised 2020 Appropriation Bill and a 2020-2022 Medium Term Expenditure Framework and Fiscal Strategy Paper.