NIGERIA’S senate has approved President Muhammadu Buhari’s request for an additional $16bn loan and an extra €1bn worth of borrowing to help the government fund its budgets under the 2018-2020 External Borrowing Plan.
Due to the debilitating effect of the coronavirus pandemic, Nigeria is totally unable to fund its annual budget, with about a third of the 2020 and 2021 budgets being financed by borrowing. Even before the pandemic struck, Nigeria was reeling from the effects of low crude oil prices but with the shutdown as a result of Covid-19, the country has become dependent on lenders like the World Bank, the International Monetary Fund and the African Development Bank to fund its budgets.
For instance, about a third of the 2021 $33bn budget was funded by external borrowing as the Nigerian economy showed no signs of generating enough revenue to finance it. With recovery nowhere on the horizon, President Buhari asked the senate for permission to borrow more yesterday, requesting $16,230,077,718 and €1,020,000,000.
Both requests were granted by senators who also approved was a grant of $125m and the request to the Bank of Industries for the issuance of €500m. These approvals, however, were accompanied by a resolution that the terms and conditions of the loan from the funding agencies be forwarded to the National Assembly prior to its execution for approval and proper documentation.
Senator Clifford Ordia, the chairman of the senate committee on local and foreign debts, said President Buhari’s request was in compliance with the provisions of the Debt Management Office Act 2003 and the Fiscal Responsibility Act 2007. He added that the provisions of the statutes enjoin the president to seek and obtain the approval of the National Assembly in respect of the external borrowing programme of the federation and states.
According to Senator Ordia, out of the total amount approved by the National Assembly, the sum of $3.52bn would be sourced from the World Bank, $5.07bn from the China Exim Bank, $3.9bn from Industrial & Commercial Bank of China, $2.89bn from China Development Bank and $698m from the Africa Development Bank (AfDB). In addition, €345m is to be sourced from the French Development Agency, €175m from the European Investment Bank, $190m from European ECA, €500m from the International Capital Market and $62m from Standard Chartered Bank.