Senate approves Buhari’s N850bn loan request

President Muhammadu Buhari’s request to raise N850 billion from the domestic capital market got a nod from the Senate on Tuesday.

The President is seeking the loan to fund projects in the revised 2020 budget after the ravages of the coronavirus pandemic.

The request was contained in a presidential memo read by Senate President Ahmad Lawan on the floor of the Red Chamber Senate.

After Tuesday’s approval, the Red Chamber mandated its Finance and Appropriation Committees to liaise with the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, to obtain more details on the loan request.

In the 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”, the President 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.”

To pass the motion, the Senate suspended Order 1 Rule 1 of the Senate Standing Orders and expressly approved that the President should go ahead and borrow the N850 billion loan from the domestic capital market