The Debt Management Office (DMO) has said that the N850 billion loan approved by the Senate on Tuesday is not a new borrowing but a mere fiscal step of converting external borrowing to domestic alternative for the purposes of achieving fiscal efficiency of the 2020 budget.
The Senate, at its first plenary session on Tuesday after an indefinite adjournment in the wake of the coronavirus pandemic in March, gave a prompt approval to the loan request by the Executive.
While giving the approval, the lawmakers emphasised that the loan, which would be sourced from domestic capital market, will be used by the government to finance key approved projects and programmes in the 2020 Appropriation Act.
The Director-General of the DMO, Patience Oniha while highlighting the details of the loan, said the loan was not a new request or incremental borrowing but rather, an amendment of the source of borrowing from external to domestic.”
She said: “The 2020 Appropriation Act approved a total of N1,594.99 billion (about N1.595 trillion) as new borrowing to part-finance the deficit in the Budget (put at about N2.175 trillion).”
The debt management expert also said the government decided to re-appraise its borrowing plans for the year in view of the devastating impact of the coronavirus pandemic, particularly on the international capital market, adding that part of the outcome of the reappraisal was to raise the N850 billion earlier approved as external borrowing, from domestic sources.
Oniha clarified: “This conversion from External to Domestic borrowing is to ensure that the implementation of the 2020 Appropriation Act is not jeopardized by lack of funds. “Thus, the N850 billion is not new or incremental borrowing, rather it is an amendment of the source of borrowing from External to Domestic sources” she added