Senate Okays Tinubu’s $2.2bn Fresh Loan Request

• As Nigeria’s debt profile hits 136trn mark

BY EDMOND ODOK – With the country’s debt profile reaching an all-time high of about N136 trillion, the Nigerian Senate on Thursday approved the fresh $2.2 billion loan request by President Bola Tinubu, maintaining that it is the way to go if government must deliver on growth and development in critical sectors of the economy.

The amount, which is about N1.767 trillion equivalent, got the Senators’ approval following consideration and adoption of the report submitted by the Senate Committee on local and foreign debts Chaired by Senator Aliyu Wammako (Sokoto North).

President Bola Tinubu had in a letter read on the floor of both Chambers of Parliament on Tuesday sought approval of a fresh $2.209 billion (N1.767 trillion) as external borrowing plan captured in the 2024 Appropriation Act.

According to the President, the request was part of Nigeria’s budgetary financing plan aimed at addressing a portion of the N9.17 trillion fiscal deficit in the 2024 budget.

The President’s letter was read by the Speaker of the House of Representatives, Tajudeen Abbas, and Senate President Godswill Akpabio, during separate plenaries on Tuesday.

Subsequently, the Red Chamber transmitted the request to the Wamakko-led Committee for further legislative action with a 24 hours timeline given the urgency of the situation.

In the Committee’s report titled, “Implementation of New External Borrowing of N1, 767, 610, 321, 779.00 equivalent to $ 2.209billion in the 2024 Appropriation Act through the issuance of Eurobonds and other sources”, Senator Wamakko explained that the loan was meant for execution of ongoing projects and programmed in the 2024 Appropriation Act which are critical for growth and development.

He further stated thus; “It will contribute to the implementation of the Debt Management Strategy which seeks to reduce the cost of borrowing, lengthen the maturity of the public debt stock, free – up space in the domestic market for other borrowers and help increase Nigeria’s External Reserves”.

Also noting that Nigeria could raise all or part of the New External Borrowing of $ 2.21 billion through the issuance of Eurobonds in the International Capital Market (ICM), the Committee recommended; “That the Senate do approve the implementation of the new external borrowing of 41,767, 610,321,779.00, the equivalent of USD2,209,512,902.22b) at the budget exchange rate of USD1.00/800 in the 2024 Appropriation Act and that the amount should be raised from one or more sources.

“Namely; issuance of Eurobonds in the ICM, Issuance of debut sovereign Sukuk in the ICM, & Bridge/ syndicated loans, subject to market conditions.

“Based on availability and cost, to issue Eurobonds in the sum of USD1.70 billion or more, but not more than USD2,209,512,902,.22b, approved as New External Borrowing in the 2024 Act.

“Given the significant increase in the official exchange rate from USD1.00/800 to approximately 41,640, it is recommended that the exchange rate excess resulting from this adjustment be exclusively utilized for the implementation of capital projects in 2024.

“This will ensure that additional funds are directed to infrastructure & developmental projects that will contribute to the Nation’s long-term growth and stability.”

Following the report presentation, the lawmakers expeditiously approved the recommendations by voice vote without any dissent.

Speaking on the Red Chamber’s approval, the Deputy Senate President, Senator Jibrin Barau, who chaired the plenary, lauded the Wammako-led team for doing a thorough job.

The Federal Executive Council (FEC) had earlier given its nod for the $2.2 billion external borrowing plan, citing the need to “strengthen the country’s finances and support economic reforms.”