Nigerians and other stakeholders have raised concerns as President Muhammadu Buhari asked the National Assembly to approve a N2.3trillion external loan to enable him to fund part of the 2021 N13.8trillion national budget.
The request was contained in a letter addressed to the Senate President, Ahmad Lawan, and Speaker, Femi Gbajabiamila and read at plenary in both chambers on Tuesday.
Buhari said the proposed loan, equivalent of N2.3trillion, was to finance the 2021 budget deficit of N5.6trillion.
He said the amount was part of N4.6trillion that the federal lawmakers had earlier approved for his regime to be borrowed this year as contained in the 2021 Appropriation Act.
He said the loan would enable the Federal Government to fund critical infrastructural projects in transportation, health and education among others.
This is coming barely a month after the Senate approved $1.5billion and €995million external borrowings for the federal government.
The loans were part of the $5.5billion and €995million external borrowings which Buhari had, in May 2020, asked the red chamber to approve to finance various priority projects of the Federal Government and to support the state governments facing fiscal challenges.
Buhari’s fresh letter was titled ‘Request for the Senate’s concurrent approval of donor fund projects under the 2018-2020 Federal Government external borrowing rolling plan’.
The projects listed under the 2018-2020 external borrowing plan, according to Buhari, are to be financed through sovereign loans from the World Bank, African Development Bank, and French Development Agency.
Other funding agencies are, Islamic Development Bank, China EXIMBank, China Development Bank, European Investment Bank, European ECA, KFW, IPEX, AFC, India EximBank and International Fund for Agricultural Development.
He said the total amount expected to be borrowed under the borrowing plan amounted to a total sum of $36,837,281,256, $910,000,000 and Grant Component of $10,000,000.
He said the projects and programmes in the borrowing plan were selected based on positive, technical and economic evaluations as well as the contribution they would make to the socioeconomic development of the country.
According to him, it would also enable the government to create employment, reduce poverty as well as protect the most vulnerable and very poor segments of the Nigerian society.
Buhari said, “All the listed projects form part of the 2018 —2020 External Borrowing Plan and covered both the federal and states governments’ projects.
“They and are geared towards the realisation of the Nigeria Economic Sustainability Plan that cut across key sectors such as infrastructure, health, agriculture and food security, energy, education and human capital development and COVID-19 Response efforts.
Meanwhile, Buhari, in another letter on Tuesday, sought the federal parliament’s nod to implement projects meant to be funded with the proposed loan.
Rising debts raising serious sustainability concerns, say ACCI, LCCI
The Abuja Chamber of Commerce and Industry and the Lagos Chamber of Commerce and Industry have both raised concerns over the rising debt profile of Nigeria following Buhari’s request that the Senate should approve another N2.3trillion external loan.
The President, ACCI, Dr Al-Mujtaba Abubakar, said the chamber was aware of the government’s plan to fund the deficit in the 2021 budget.
He, however, told our correspondent that the government should be mindful of the adverse effect of excessive borrowing.
Abubakar said, “We, however, urge the Federal Government to take judicious note of the negative side of excessive borrowing, especially on interest payment among others. We particularly called attention to the already high debt service rate and its attendant depletion of revenue earnings.
“We once again call on the Federal Government to minimise borrowing and focus more on cutting the cost of governance. If this is not done, debt service may soon further cripple the economy and dampen any hope of higher GDP growth.
“When other economic indices are considered, it is clear the administration needs to urgently embark on cost chatting measures before it is too late.”
On his part, the Director-General, LCCI, Dr Muda Yusuf, said although the request was not an entirely new proposition, the government should be cautious of growing the country’s debt profile.
He said, “The rising debt profile of the government raises serious sustainability concerns. Although the government tends to argue that the condition is not a debt problem, but a revenue challenge.