National Assembly approves new loan of 2.343 billion naira for Buhari

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Of Fred itua, (Abouja), Mert ibe and Chinwendu Obienyi

the The Senate yesterday approved President Muhammadu Buhari’s request to borrow 2,343,387,942,848 naira, to partially finance the 2021 national budget of 13 trillion naira. The Senate decision followed a resolution of its committee on local and foreign loans presented by the president, Clifford Ordia.

The Committee recommended that the Senate approves Buhari’s request for $ 3,000,000,000 issuance but not more than $ 6,183,081,643.40 Eurobond on the international capital market. the an external loan of 2,343,387,942,848 naira, according to the panel, should be used to finance part of the deficit authorized in the 2021 budget law.

The Committee also recommended that the Senate approve that the authorized amount may be collected from multiple sources such as the international capital market and any other multilateral or bilateral source available.

He also recommended that the Senate instruct the Minister of Finance, Budget and National Planning, the Director General of the Debt Management Office and the Governor of the Central Bank of Nigeria to submit to the National Assembly within 10 business days (excluding the day of closing of trading) a letter containing the amount in United States dollars so collected and received as a result of the above approval as well as the applicable exchange rate. Recent approvals have brought loans approved so far by the Senate, to the 9th National Assembly, to over 45 billion naira since June 2019.

In April, the Senate approved $ 1.5 billion and € 995 million in the president’s external loan requests. Buhari had also in May 2020, sent a letter to the Senate asking for its approval to access another round of external loans to allow his administration to finance the 2020 budget deficit, finance certain projects and support certain states of the federation.

In the meantime, the Senate has adopted the supplementary budget submitted to both houses of the National Assembly two weeks ago by Buhari.

Buhari had proposed 895,842,465,917 billion naira, but the Senate appropriations committee in its report presented by the president, Barau Jibrin, increased the size of the budget to 982,729,695,343 naira.

The breakdown showed that 123,332,174,164 N are intended for recurrent expenditure (excluding debt) while the sum of 859,397,521,179 is intended for the contribution to the development fund for capital expenditure for the year ending on December 31, 2021.

Reacting to the new loan request, former Anambra governor Chukwuemeke Ezeife, said there was not a need for so many loans. The effect of borrowing will be negative on the economy

The borrowed money does not produce anything that we can see. I do not even know how the Senate and the Presidency divide the loan. They shouldn’t take the loan. Nigeria should stop borrowing.

For David Adonri, CEO of Highcap Securities, “The government has fallen into a debt trap and it is very dangerous for us right now. It is a calamity that we borrow to meet its existing debt and borrow to finance the execution of the deed. We are heading towards a debt crisis.

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