The Nigerian Senate has approved President Muhammadu Buhari’s request for more external loans of $8,325,526,537 and €490m under the 2018-2020 External Borrowing (Rolling) Plan.
The approval, on Thursday, was sequel to the consideration of a report on the 2018-2020 External Borrowing (Rolling) Plan by the Committee on Local and Foreign Debt.
Chairman of the Committee, Senator Clifford Ordia, in his presentation, said the committee noted with utmost importance, the genuine and very serious concerns of Nigerians about the level and sustainability/serviceability of the country’s borrowings in the last decade.
He stated, “Our debt service figures constitute a huge drain on our revenue to the extent that they account for over 30 per cent of our expenditure in the annual budget.”
Due to the shortfall in the country’s yearly revenue in relation to the need for rapid infrastructure and human capital development, he explained, “We have had to pass deficit budget every year, requiring us to borrow to finance the deficit in our budget.”
Ordia noted that out of the total borrowing request of $36,837,281,256 in the re-forwarded request of the President, $26,154,536,533 is to be borrowed from various financial institutions from the Peoples Republic of China.
According to him, the proposed projects in the Ministries of Transportation, Federal Capital Territory, Aviation, Works and Housing, Agriculture and Water Resources, and some commissions such as National Universities Commission, North East Development Commission and the National Identity Management Commission are mostly ongoing projects and programmes in respect of which external borrowed funds have been spent in the past, including loans.
“These projects have a great multiplier effect on stimulating economic growth through infrastructure development, job creation and poverty alleviation, stimulation of commercial and engineering activities and the consequent tax revenues payable to government as a result of these productive activities,” Ordia explained.
The funding agencies are World Bank ($796m), China Exim Bank ($2,901,026,509), Industrial Commercial Bank of China ($2,484,555,304), African Development Bank ($104.2m), Africa Growing Together Fund ($20m), French Development Agency (€240m), European Investment Bank €250m), European ECA/KfW/IPEX/AFC ($1,959,744,724) and International Fund for Agricultural Development ($60m).
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