Buhari Seeks Senate's Consent For $5.5BN Loan
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The Nigeria's President, Muhammadu Buhari has asked the country's Senate to approve a loan of $5.5 billion to enable the government fund the 2017 budget.
President Buhari’s request was contained in a letter read by Senate President Bukola Saraki on the floor of the parliament on Tuesday, 10th October 2017.
The president equally stated the 2017 budget had a deficit of #2.356 trillion.
“Implementation
of the external borrowing plan approved in the 2017 appropriation Act.
External borrowing to refinance maturing domestic debts through the
issuance of $3 billion Euro bond in the international capital market or
through a loan syndication,” the letter read.
“The Senate may wish
to refer to 2017 appropriation Act which has a deficit of #2.356
trillion and provisions for near borrowings 2.321 trillion. The Act also
provides for 1.254 trillion and external borrowing of 1.067 trillion
about $3.5 billion. Issuance of $2.5 billion for financing the 2017
appropriation Act.
“The balance of the 2017 external borrowing in
the sum of $3.2 billion is planned to be partially sourced in the ICM of
$2.5 billion through Eurobonds or a combination of Eurobonds and
Diaspora bonds while $700 billion is proposed to be raised from
multilateral sources.
“It should be noted that intention is to
issue the Eurobonds first with the objective of raising all the funds
through Euro bonds and diaspora bonds will only be issued when the full
amount cannot be raised through Euro bonds.”
He explained that the federal government planned to substitute domestic debts with “less expensive long-term external debts”.
“In
order to reduce debt service levels, and letting tenure profile of debt
stock, the FGN seeks to substitute domestic debts with less expensive
long-term external debts. The FGN seeks to source $3 billion through the
issuance of Eurobonds to the ICM and or loan syndication by banks as
approved by the federal executive council,” the letter read.
“It
is important to note that the proposed sourcing of $3 billion from
external sources to refinance maturing debts will not lead to an
increase in public debt profile because debt already exists, rather the
substitution of domestic debts with relatively cheaper and long-term
external debts will lead to a significant decrease in debt service cost.
“This
will also achieve more stability in the debt stock while also creating
more borrowing space in the domestic market for the private sector.
Compiled by: Rostrum
Contact:- +2348028608056, rostrummedia@gmail.com
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