Senate approves Buhari’s request for $ 1.5 billion, € 995 million external loan
The Senate on Tuesday approved $ 1.5 billion and 995 million euros (about 1,000 billion naira at official exchange rates) in the president’s foreign loan requests.
This approval followed consideration of the Senate Committee on Local and Foreign Debt report presented by its chairman, Clifford Odia (PDP, Edo Central).
President Muhamadu Buhari had in May 2020, sent a letter to the Senate seeking its approval for another batch of external loans to allow the administration to finance the 2020 budget deficit, “critical projects”, and to support certain states of the federation.
The federal government said that “the loans will be used to carry out priority projects and help state governments stimulate their economies, which have been hit hard by the COVID-19 pandemic.”
In his presentation, Mr. Ordia noted that the loans are largely concessional loans with low interest rates and a reasonable moratorium and repayment period.
“No unusual or onerous conditions are attached to the terms of the loans and do not in any way compromise the sustainability of the Nigerian economy or undermine the integrity and independence of Nigeria as a sovereign nation”, did he declare.
“The loan is in the immediate best interest of the Nigerian state and its citizens to deal with the COVID-19 pandemic so that the economy is positioned for a rapid recovery and resumption of growth.
“While Nigeria’s total stock of public debt is increasing, it remains relatively low relative to the country’s GDP and increased borrowing needs are needed to support economic recovery. “
The approved loans are as follows:
– $ 750 million from the World Bank for States, Fiscal Transparency, Accountability and Sustainability (SFTAS) program to provide fiscal support to States.
– $ 750 million from the World Bank for the COVID-19 Action Recovery and Economic Recovery program to support state-level efforts to protect livelihoods, ensure food security and stimulate economic activity (N- CARES).
– 671 million euros, 324 million euros and 995 million euros from the Bank of Import-Export of Brazil (BNDES) and Deutsche Bank of Germany for the Green Imperative in order to strengthen the mechanization of agriculture and agro progress in Nigeria (GIP).
This brings the total loans approved to $ 1,500,000,000 and € 995,000,000.
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The panel added that GIP funding, additional funding for SFTAS and CARES came from global multilateral and bilateral lenders – and partners with a proven track record of financial accommodation and support in Nigeria.
Experts have expressed concern as Nigeria’s debt profile continues to rise over the years.
In addition to borrowing to finance the budget and “revive” the economy, the country plans to sell some domestic assets to raise funds. Nigeria is also considering borrowing money from dormant bank accounts and retirement savings, although it is tightening its sources of tax revenue.
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