The Senate has approved the $5.5 billion loan request presented by the President, Muhammadu Buhari.
The approval comes after a consideration of the report of the committee on local and foreign debts, which was laid by Senator Shehu Sani on Tuesday.
The President had requested the issuance of $2.5 billion to finance the 2017 Appropriation Act and $3.0 billion to refinance Nigeria’s domestic debts.
In a letter sent on October 10, President Buhari explained that the sum of 3.2 billion Naira is planned to be partially sourced from issuances in the international capital market, 2.5 billion dollars would be sourced through the euro bonds or a combination of Eurobonds and diaspora bonds while seven hundred million dollars is proposed to be raised from multilateral sources.
He further explained that the proceeds from the proposed issuance of Eurobonds and diaspora bond in the international capital market would be used to finance the deficit in the 2017 Appropriation Act and provide funding for capital in the budget.
Some of the capital projects include the Mambila Hydropower Project, construction of a second runway at the Nnamdi Azikiwe International Airport, as well as counterpart funding for rail projects and the construction of the Bodo- Bonny road with a bridge across the Opobo channel.
President Buhari has also revealed that the Federal Government plans to source three billion dollars through the issuance of Eurobonds in the international capital market to refinance maturing domestic debt as a means of reducing debt service levels.
He, however, maintained that this would not lead to an increase in the public debt portfolio because the debt already exists in the form of high-interest short-term domestic debt.
Amid rising concerns from Nigerians about the nation’s foreign debt profile, the Minister of Finance in an interview with Channels Television in October also cleared the air on “misconceptions” surrounding the borrowing.
“We are not in a huge amount of debt,” she stated.
“Nigeria’s borrowings are actually low relative to the size of our GDP; it is one of the areas where we are doing very well. We have a debt GDP of 17 per cent; Ghana is 68, South Africa is about 52, most developed countries are about 50.
“The threshold for a developing economy is 40; we are 17, Britain is 89, America is over a hundred. Even Germany which is probably the most conservative borrowing country in Europe is 68. So we are not in the huge amount of debt,” the minister stressed.