Senate refers $5.5bn loan request to committee

Senate refers $5.5bn loan request to committee

Senate refers $5.5bn loan request to committee

The Peoples Democratic Party has accused President Muhammadu Buhari of mortgaging the future of Nigerians with his desire to borrow $5.5bn foreign loan. The Act also provides for domestic borrowing of N1.254 trillion and external borrowing of N1.067 trillion (about USD3.5 billion).

President Buhari's request was contained in a letter read on the floor of the Upper Chamber by the Senate President, Dr Bukola Saraki.

Implementation of the External Borrowing Approved in the 2017 Appropriation Act: "11 External Borrowing to Re- finance maturing domestic debts through the issuance of USD3.00 Billion Eurobond in the International Capital Market or through a loan syndication".

President Buhari has also revealed that the Federal Government plans to source three billion dollars through the issuance of eurobonds in the global capital market to re finance maturing domestic debt as a means of reducing debt service levels.

In the letter, the president explained that the proposed sourcing of $3 billion from external sources to refinance maturing debts would not lead to an increase in public debt profile‎.

According to Buhari, the Federal Government planned to substitute domestic debts with "less expensive long-term external debts".

Another feature of the external loan request is that, "being a market based transaction, the terms and conditions of the borrowing can only be determined at the point of issuance of finalization, based on prevailing market conditions in the International Capital Market".

He further explained that the substitution of domestic debt with relatively cheaper and longer term external debt will lead to a significant decrease in debt service cost. Issuance of $2.5 billion for financing the 2017 appropriation Act. This proposed re-financing of domestic debt through external debt will also achieve more stability in the debt stock while also creating more borrowing space in the domestic market for the private sector.

"The Federal Ministry of Finance, the Debt Management Office and the federal government's appointed transaction parties for the proposed external borrowings will work assiduously within the context of the market to secure the best terms and conditions for the Federal Republic of Nigeria".

Saraki noted that the lawmakers would do their part to ensure that the agencies lived up to expectation.