President Muhammadu Buhari, yesterday, wrote the National Assembly for approval to borrow fresh $6.183 billion (N2.343 trillion) to fund the 2021 budget deficit of N5.602 trillion.
Titled “Request for the resolution of the National Assembly to the implementation of the new external borrowing of N2.343 trillion, which is about $6.183 billion in the 2021 appropriation Act” and addressed to the Speaker of House of Representatives, Femi Gbajabiamila, the President explained that the fund would be sourced from multiple avenues, including multilateral and bilateral lenders, as well as the International Capital Market (ICM) via issuance of Eurobonds.
The letter read: “From recent trends in the ICM, it is now possible for Nigeria to raise funds from there and this explains why we are proposing that the new external borrowing in the 2021 Appropriation Act should include issuing Eurobonds in the ICM.
“We estimate that Nigeria may be able to raise $3 billion or more, but not more than $6.183 billion (the amount provided in the 2021 Appropriation Act) in a combination of tenors between five and 30 years.”
According to Buhari, the outcome would be determined when the nation approaches the market, noting that “not only is the ICM now open to issuers like Nigeria and interest rates lower than the levels In 2020, given the recent monetary policy stance, as well as rising levels of inflation, the level of liquidity in the domestic market has decreased while domestic interest rates are beginning to rise.”
He stated that “accessing the ICM will be relatively cheaper, thereby, moderating debt service cost and it will also contribute to the level of external reserves.”
The Nigerian leader said the $6.183 billion would fund specific capital projects captured in the financial document.
Priority sectors like power, transportation, agriculture and rural development, education, health, counterpart funding for multilateral and bilateral projects, defence and water resources are to get attention.
RELATEDLY, a former consultant to the United Nations Development Programme (UNDP), Dr. Samson Olalere, has cautioned Buhari against plunging Nigeria into economic dungeon and slavery.
Reacting to the new request, yesterday, in Ibadan, Oyo State, the development economist argued that the Nigerian economy would be “subservient to the western economies due to penchant for loans, as the previous ones did not make any meaningful impact in the lives of Nigerians because they were not deployed to meaningful and impactful areas.”