President asks National Assembly to approve $5.5bn foreign loans

The President Muhammadu Buhari has asked the Senate to approve an external loan of 5.5billion dollars to finance the 2017 budget

The President Muhammadu Buhari has asked the Senate to approve an external loan of 5.5billion dollars to finance the 2017 budget

President Muhammadu Buhari has requested Nigeria's upper legislative chamber, the Senate to approve another foreign loan of $5.5 billion to fund the 2017 budget.The request is contained in a letter sent to the Senate by Buhari and read by the Senate President, Dr. Bukola Saraki on Tuesday in Abuja.

He said the Act also provided for domestic borrowing of N1.254tn and external borrowing of N1.067tn (about $3.5bn).

The four- page letter which was addressed to Senate President, Bukola Saraki is entitled, " Request for the approval of External Loans for: 1.

In a letter to the National Assembly on Tuesday, President Buhari had sought the approval of the lawmakers on his plans to borrow the money for the financing of the 2017 Appropriation Act.

According to the letter, while $3 billion would be sourced through Euro bond, the remaining $2.5 would come from other sources in the worldwide capital market.

According to him, sourcing for the $3bn will not lead to an increase in the public debt portfolio, "because the debt already exists, albeit in the form of high interest short-term domestic debt".

Part of the sum is to be expended in settling $3 billion maturing domestic debt obligations of the federal government.

On the issuance of $2.5bn for financing the Appropriation Act, Buhari noted that in order to implement the external borrowing plan approved by the National Assembly in the 2017 Appropriation Act, the Federal Government issued a $300m Diaspora Bond in the global capital market in June this year. Issuance of $2.5 billion for financing the 2017 appropriation Act.

"The Senate will recall that in the 2017 Appropriation Act, debt service at N1.663 trillion represents 32.73 per cent of the FGN's total expenditure, which makes it important to take urgent steps to reduce debt service cost".

"The Senate may wish to note that the proceeds from the proposed issuance of Eurobonds (and Diaspora Bond) in the ICM would be used to finance the deficit in the 2017 Appropriation Act and provide funding for the capital projects captured in the budget".

"The Federal Ministry of Finance, the Debt Management Office and the Federal Government's appointed transaction parties for the proposed external borrowings will work assiduously within the context of the market to secure the best terms and conditions for the Federal Republic of Nigeria", Buhari added.

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