The Senate has explained why it decided to grant another request by the federal government to borrow more.
The Senate, on Wednesday, gave the Muhammadu Buhari government to go-ahead to get $16bn and €1.02bn fresh loans.
The $16.2bn loan is equivalent to N6.7tn using the Importers and Exporters’ Window exchange rate of N411.24/$1, while the €1.02bn is equal to N485.5bn using the Central Bank of Nigeria’s (CBN) exchange rate f N476/ €1.
These bring the value of the loans to be acquired to N7.2tn, meaning that Nigeria’s debt stock of N35.5tn will rise to N42.7tn following the approval.
The chairman of the Committee on Local and Foreign Debt on the proposed 2018-2020 External Borrowing (Rolling) Plan, Senator Clifford Ordia, said that President’s Buhari’s request was in compliance with the provisions of the Debt Management Office (Establishment) Act, 2003 and the Fiscal Responsibility Act, 2007.
Ordia said 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.
The senator 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.
Ordia stated that $2.8bn was being expected from the China Development Bank; and $698m from the Africa Development Bank.
He added 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.
Ordia 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, however, 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.
The senator said the development constituted a drain on the nation’s economy and limited resources available for national development.
Underscoring the need for a more proactive approach to revenue enhancement, the lawmaker observed that “there are noticeable improvements in our revenues, but the growth is not sufficient or rapid enough to catch up with the pace of development required for our nation.”
Ordia also stated that out of the sum of over $22.8bn approved by the National Assembly under the 2016-2018 External Borrowing Plan, only $2.8bn, which represented 10 per cent, had been disbursed to Nigeria.
The lawmaker said the projects, which required additional financing, would have great multiplier effects on stimulating economic growth through infrastructure development, job creation, poverty alleviation, health care, and improve the nation’s security architecture.
He emphasised that tax revenues accruable to the government would increase as a result of the impact of commercial and engineering activities.
Via Punch
