The Senate on Tuesday, June 2 approved the $5.513 billion external loan requested by President Buhari to finance the revised 2020 budget.
This follows the presentation and consideration of the report of the Senate Committee on Local and Foreign Debts, Senator Clifford Odia (Edo Central) by the upper chamber.
The approval comes less than a week after Buhari sent in the loan request to the Senate.
Buhari stated in the letter that the $5.513 billion external loan is to enable the Federal Government fund the 2020 revised budget.
However, it would be recalled that the external loan which is to enable the Federal Government execute its priority projects and for projects to support State Governments in stimulating their economy which has been adversely affected by the COVID-19 pandemic, was stood down by the Senate due to lack of requisite details.
Mr Ordia noted in his presentation that the emergence of COVID-19 has altered the plans and projections of the government as captured in the 2020 budget.
“Such impact has affected the revenue generation plan of the government, leaving it with a larger deficit than envisaged,” he said.
The Senate also approved the Medium Term Expenditure Framework and Fiscal Strategy Paper projections, upon which the revised 2020 budget would be based.
Ibrahim Gobir (APC, Sokoto) said that without the loan “we cannot move anywhere with the recommendation on the MTEF.”
Tolu Odebiyi (APC, Ogun) said the loans were needed because of low budgetary implementation over time.
“Even at the best of times, we have only done another 50-54 per cent of our budget not to talk of a time like this that we are in crisis.”
However, he said more work needs to be done with the budget, especially in terms of duplication of expenditure as the country “cannot run away from cutting costs.”
Meanwhile, the House of Representatives, on Tuesday, passed the $22.7 billion loan earlier approved by the Senate.
Nigeria’s rising debt profile, as of September 30, 2019, was ₦26.2 trillion. Of this amount, total domestic debts is about ₦18 trillion, or 68.45 per cent. About ₦8 trillion are owed to foreign lenders.
The approved $5.513 billion loans include:
- $3.4 billion from the International Monetary Fund (IMF) for Rapid Financing Instrument to part-finance FGN 2020 proposed revised budget deficit;
- World Bank’s $1.5 billion for the Development Policy Financing to part-finance FGN 2020 revised budget deficit;
- $500 million from African Development Bank (AfDB) for COVID-19 crisis response budget support operation to part-finance FGN 2020 revised budget deficit; and
- $113 million from Islamic Development Bank (IDB) to part-finance FGN 2020 revised budget deficit.