The Senate, in a sitting that lasted less then five minutes, yesterday, approved President Muhammadu Buhari’s request to borrow a fresh loan of N850 billion to finance the 2020 budget.
The request was contained in a letter read on the floor of the Senate by Senate President, Ahmad Lawan.
Buhari had sought the approval of the Senate, in line with provisions of the 1999 Constitution.
Buhari said the loan, which would be sourced from the Nigerian domestic capital market to fund critical capital projects, had become necessary following the sharp fall in the price of crude oil. He said the conditions in the domestic capital market were favourable in terms of availability of funds and relatively low interest rates.
“This cause of action is deemed prudent, given our current realities,” he said.
The outbreak of COVID-19 had led to low demand for oil in the international market, with dire impact on the implementation of the 2020 budget. The Senate considered Buhari’s request and unanimously granted approval for the loan, bypassing the usual rigorous committee scrutiny and public hearings.
It, however, mandated its relevant committees to liaise with the Minister of Finance, Zainab Ahmed, on the modalities for the loan.
“The Senate may wish to recall that the 2020 Appropriation Act provided for N1,594,986,700,544 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 only. 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, 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. 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,” Buhari said.
Buhari informed the Senate that he had “directed the Minister of Finance, Budget and National Planning to make herself available to provide any additional information or clarification which you may require.”
However, the resumption of the two chambers of the National Assembly did not come without its usual drama, as journalists were barred from accessing the complex and covering proceedings by the lawmakers.
Citing the outbreak of the deadly COVID-19 as a reason, security agents denied journalists duly accredited to cover activities of the National Assembly entry, despite media professionals’ strict compliance with modalities put in place by the management of the parliament.
Journalists, numbering over 100, were not only prevented from entering the National Assembly, but asked not to stay anywhere close to the entrance to the complex by security agents who claimed that they were under strict instructions to bar journalists from the complex.
In a related development, the International Monetary Fund (IMF) has also approved Nigeria’s $3.4bn emergency loan request to aid it tackle anticipated huge impact of the coronavirus pandemic
Owing to the sliding oil prices and lockdowns, Buhari had requested the amount, which is the total of its existing holding with the IMF, under the Rapid Financing Instrument, which offers funding without the strings of a full program.
As at April 15, 2020, up to a hundred countries had approached the IMF for similar support under its rapid financing instrument, as calls heighten on the Fund to ramp up crisis response for emerging markets and developing countries to enable them combat impact of coronavirus.
Announcing the request to IMF earlier in the month, Zainab Ahmed, Minister of Finance, Budget and National Planning, had insisted that Nigeria does not intend to negotiate any formal bailout program with the IMF.
PDP, IPOB kick
The Peoples Democratic Party (PDP) has expressed concerns over the hasty approval of yet another loan of N850 billion for President Muhammadu Buhari’s administration by the Senate, yesterday.
The PDP in a statement by its National Publicity Secretary, Kola Ologbondiyan, on Tuesday, said it was worrisome that despite allegations of financial recklessness and lack of accountability by the federal government, the Senate went ahead to approve a new loan for President Buhari.
The opposition party noted that the All Progressives Congress (APC) led administration has allegedly failed to articulate tangible wealth creation programmes to buoy our economy.
The PDP stated that despite the huge natural and human resources at the disposal of the government, it relishes only in accumulating loans, without precise repayment plans, thereby pawning the economy and the future of the country.
Meanwhile, leader of the Indigenous People of Biafra (IPOB), Nnamdi Kanu, has written a letter to the International Monetary Fund (IMF), Africa Development Bank (ADB) and the World Bank urging them not to grant Nigeria’s request for a loan to tackle the coronavirus pandemic.
The letter, issued in Owerri yesterday, through the media and publicity secretary of the group, Emma Powerful, also noted that the group had earlier opposed a loan from China because it excluded the South-East as a beneficiary.
Powerful said they could not vouch for Nigeria repaying the loans, claiming that it breached the country’s Constitution, if not judiciously disbursed.
On that ground, he claimed that IPOB was against the loans from foreign countries and banks.
“It is noteworthy that the Indigenous People of Biafra was on the frontline of rallying a groundswell of opposition to the loan, especially because of its proposed expenditure plan that excluded the South-East part of Nigeria, in flagrant breach of Nigeria’s Constitution. We were concerned that any foreign loan obtained in breach of the organic law of Nigeria would provoke a political/legal backlash that will complicate its repayment. And with the COVID-19 pandemic, contemporaneously diverting the attention of the world, including China, the loan seems to be on hold for now. That is well and good.