Senate okays $5.5b loan request
Data made available by the Debt Management Office (DMO) yesterday showed that Nigeria’s debt stock has hit N20 trillion—as at September 30.
Domestic debt accounts for 76.96 per cent of this figure while foreign debt accounts for 23.04 per cent.
In figures, domestic debt stood at N15.679 billion, an increase of 4.1 per cent from the N15.034 trillion recorded in June.
Foreign debt stood at N4.694 trillion, a rise of 1.9 per cent above the N4.602 trillion as at June 30.
According to the DMO, the figures show that the federal government was more inclined to domestic debt, which is partly responsible for the high debt service figures.
This year, the Federal Government issued various debt instruments like the N100 billion Sukuk for road construction, monthly FGN Savings bond and the Eurobond.
The Federal Government has already expressed intentions in raising $5.5 billion externally.
According to Finance Minister, Mrs. Kemi Adeosun, $2.5 billion will be used to part finance the N2.322 trillion deficit in the 2017 budget and $3 billion to repay maturing domestic debt.
This will also contribute to attaining the target 60:40 domestic and external debt ratio.
The office said other benefits expected from the plan are: increased availability of funds to the private sector and lower domestic lending rates; both of which will contribute to the growth of the private sector and increase the level of external reserves to support the naira.
Also, the Senate yesterday approved the request of President Muhammadu Buhari to borrow $5.5 billion.
Of the $5.5billion, $2.5 billion, according to the presidential request, will be used to fund the 2017 budget while the balance of $3 billion is meant to refinance domestic debts.
Nigeria’s debt profile stood at N19.6 trillion as at June 30 of this year, according to the Debt Management Office (DMO) document.
Before the unanimous approval of the loan, some senators however called for caution on the way and manner the Federal Government rushes to take foreign loans.
The lawmakers particularly expressed fear that the ability of the country to repay the loans might be limited if the national currency depreciates further.
One of them, Senator Yusuf Abubakar Yusuf, (Taraba central), said: “We must be very careful because this is dependent on what happens in our foreign reserves. If our foreign exchange rate goes to N500/USD1, we are going to have a very serious problem on generating enough foreign exchange to pay the foreign debts.”
The approval of the loan followed the adoption of the report of the Committee on Local and Foreign Debts that vetted the request sought partly to finance the deficit in this year’s budget.
Chairman of the Committee, Senator Shehu Sani told the Senate that “the terms and conditions of the loan are favourable and do not pose any compromise to the integrity, independence and interest of Nigeria and its citizens.
“The projects are essential for rapid economic and social development of Nigeria. And that the projects, when completed, will create jobs through a chain of economic activities.”
The committee noted that the $3 billion local debt refinancing cash will not lead to an increase in the public debt portfolio but will reduce the cost of the debts while the projects are essential for rapid economic and social development of Nigeria.
It said the construction of the second runway in the Nnamdi Azikiwe International Airport will enhance the safety of air passengers, increase the use of the airport by international airlines, “thus increase the revenue base of the government.”
It said the rail projects, when completed, will reduce the use of roads, its attendant congestion and thus minimise the cost of road maintenance.