Senate approves Buhari’s N850bn loan request

The Senate has approved the N850bn loan request of President Muhammadu Buhari.

The president had sought the Senate’s approval for the loan to fund some projects in the 2020 budget.

He made the request in a letter read on Tuesday by Senate President Ahmad Lawan, during plenary.

Buhari sought to raise the loan from the Domestic Capital Market to finance critical projects and programmes in the 2020 budget.

He said the recent developments in the global economic environment occasioned by coronavirus and decline in international oil prices had made it less attractive to borrow from the International Capital Markets.

Buhari said the conditions in the Domestic Capital Market were favourable in terms of availability of funds and relatively low-interest rates.

The letter read in part, “To ensure that there are adequate funds to finance critical projects and programmes in the 2020 Budget, I hereby seek the Senate’s approval, by Resolution, to raise the N850bn of New External Borrowing, in Naira, from the Domestic Capital Market, instead of from the Internattonal Capital Markets.

Buhari’s letter, however, provided no details of the “critical projects and programmes” to be financed with the loan.

Lawan asked the committees on Finance and Appropriation to liaise with the Minister of Finance, Budget and National Planning, Zainab Ahmed, to get more details on the loan request.

Chairman, Senate Committee on Media and Public Affairs, Senator Ajibola Basiru, in a statement later, clarified that the Senate approved that the N850bn external borrowing should now be raised from the Domestic Capital Market for the funding of the 2020 budget.

The Senate also on Tuesday urged the Federal Government to appropriate at least 10% of the GDP as a stimulus package for investment into critical infrastructure in health and education sectors; agricultural value chains; solid mineral value chains; renewable sources of energy; petroleum industry value chain; transportation, and power.

The Debt Management Office, in a statement, explained that the 2020 Appropriation Act approved a total of N1,594.99bn as new borrowing to part-finance the deficit in the budget. This was made up of N794.99bn domestic borrowing and N850bn external borrowing.

“With the Covid-19 pandemic and its attendant effect on the world economy and the International Capital Market, the Federal Government reappraised its borrowing plans and decided that it would be more expedient to raise the N850bn, earlier approved as external borrowing, from domestic sources. This conversion from external to domestic is to ensure that the implementation of the 2020 Appropriation Act is not jeopardized by a lack of funds.

Thus, the N850bn is not new or incremental borrowing, rather it is an amendment of the source of borrowing from external to domestic.”

Meanwhile, the Peoples Democratic Party, in a statement on Tuesday by its National Publicity Secretary, Kola Ologbondiyan, asked Buhari to “stop external borrowing, cut on luxury, slash the number of presidential appointees, cut down huge allowances that gulp billions of naira and maintain a lean budget that would centre on health, research and growth of the nation’s economy among other critical needs.”