Senate approves Buhari’s N850bn loan request

The Senate, on Tuesday, expressly approved President Muhammadu Buhari’s request to raise a fresh loan of N850 billion from the domestic capital market to fund projects in the 2020 budget.

The request was contained in a Presidential memo read by the Senate President, Ahmad Lawan, on the floor of the Senate.

The upper chamber also mandated its Finance and Appropriation Committees to liaise with the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, to obtain more details of the loan request.

Buhari’s in his letter, titled: “Request for the National Assembly to raise N850 billion in new external borrowing in the 2020 Appropriation Act in Naira from the domestic capital market” said:

“The Senate may wish to recall that the 2020 Appropriation Act provided for N1,594,986,700,544.00, comprising N744,986,007,544.00 of new domestic borrowing and N850 billion of new external borrowing.

“These borrowings were to part-finance the 2020 budget deficit of N2,175,197,885,232.00 only.

“Furthermore, the Senate may wish to note that external borrowing from the international capital market increases Nigeria’s external reserves, provides access to lower costs as well as avoids crowding out private sector borrowers who also wish to access the domestic capital market.

“However, recent developments in the global economic environment as a result of the Coronavirus pandemic and the decline in international oil prices have made it less attractive to borrow from the international capital markets at this time.

“To ensure that there are adequate funds to finance critical projects and programmes in the 2020 budget, I hereby seek the Senate’s approval, by Resolution, to raise the N850 billion of new external borrowing in naira from the domestic capital market instead of from the international capital market.

“However, it remains our intention to access the international capital market when conditions improve to refinance this N850 billion of new borrowing and epitomise the benefits inherent in external borrowing.

“Presently, the conditions in the domestic capital market are favourable in terms of availability of funds and relatively low interest rates

“This cause of action is deemed prudent given our current realities.

“I have directed the Minister of Finance, Budget and National Planning to make herself available to provide any additional information or clarification which you may require.

“I trust that this request will be expeditiously considered to accelerate the raising of the N850 billion new borrowing from the domestic capital market to part finance the 2020 budget deficit as well as to deliver critical programmes and projects to the Nigerian people.”

The Senate however suspended its Order 1 Rule 1 of the Senate Standing Orders and expressly approved that the President should go ahead and borrow the N850billion loan request from the domestic capital market.

Also on Tuesday, the Senate considered a
motion titled: “COVID-19 Pandemic: Reviewing the National Response to the challenges and the way forward.”

The motion was sponsored by the Leader of the Senate, Senator Yahaya Abdullahi (Kebbi North) and co-sponsored by the Minority Leader of Senate, Senator Enyinnaya Abaribe (Abia South) and five others.

After due debate on the motion, the Senate resolved to urge the executive to fast track the submission of the revised Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) and the 2020 Appropriation Act to the National Assembly for consideration and passage.

The Senate also urged the Federal Government to appropriate at least 10 per cent of Gross Domestic Product (GDP) as a stimulus package for investment into: Health and Education infrastructures; Agricultural value chains; Solid mineral value chains; Renewable sources of energy; Petroleum industry value chain; Research, Science and Technology.

The Senate, after it adopted and approved its votes and proceeding for Tuesday, 28 April, 2020, adjourned plenary sine die.