The Senate has approved President Bola Tinubu’s request to borrow $ 7.8 billion and €100 million as part of the 2022 – 2024 borrowing plan of the Federal Government.
The request was approved after the Senate considered and adopted the report of its committee on Local and Foreign Debt during Saturday’s plenary.
Tinubu had said that the Federal Executive Council under former President Muhammadu Buhari approved the loan facility on May 15, 2023, to finance health, education, infrastructure, agriculture, insecurity, and other sectors.
The president added that the foreign loan has become necessary to bridge the financial gap and return the economic activities of the country to normalcy, adding that it would be used to develop infrastructure, agriculture, health, education, water supply, security, and employment as well as financial management reforms.
Similarly, the Red Chamber also okayed Tinubu’s request to securitise the Central Bank of Nigeria N7.3trn Ways and Means advances to the Federal Government.
Tinubu had, in a letter read by the Senate President yesterday, said the securitisation aims to reduce debt service costs and extend the repayment period of the existing loans.
The Ways and Means provision allows the government to borrow from the Central Bank if it requires short-term or emergency financing to support delayed government projected cash receipts of fiscal shortfalls.
The interest rate for the securitised Ways and Means advances has been reduced to 9% per annum, compared to the MPR of 0.3%.
“The savings arising from the much lower interest rate will have to reduce the deficit in the budget,” Tinubu said.
Back in June, the World Bank had approved Tinubu’s request to borrow $800 million from it to help cushion the impact of high fuel prices after supposedly ending the costly petrol subsidy.
The subsidy had kept prices cheap for decades but had become increasingly expensive – it cost the government $10 billion last year – leading to wider budget deficits and driving up government debt.
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