Wednesday, 29 November 2023 04:51

After saying borrowing is ‘the last thing we must rely on’, Tinubu asks for N’Assembly’s approval to borrow $8.7bn

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President Bola Tinubu has transmitted the 2022-2024 external borrowing plan to the national assembly.

Tinubu’s request was read on Tuesday on the floor of the lower legislative chamber by Tajudeen Abbas, speaker of the house of representatives.

In the borrowing plan, the president is seeking approval of the legislature to borrow $8,699,168,559 and €100,000,000

The plan also includes $1 billion from the African Development Bank  (AfDB) and $1.5 billion from the World Bank group.

Tinubu said the 2022-2024 external borrowing rolling plan was approved by the federal executive council (FEC) on May 15, under former President Muhammadu Buhari.

The president said the projects in the borrowing plan cut across all sectors with “specific emphasis on infrastructure, agriculture, health, education, water supply, growth, security and employment generation, as well as financial management reforms, among others”.

“Following the removal of the fuel subsidy and its attendant impact on our economy, the African Development Bank (AfDB) and the World Bank Group (WBG) have indicated interest in assisting the country to mitigate the impact with the sum of USD1 billion and USD1.5 billion, respectively, in addition to the FEC approved 2022-2024 external abridged borrowing (rolling) plan,” the letter reads. 

“Consequently, the required approval is USD8,699,168,559.00 and Euro 100,000,000.00. I would like to underscore the fact that the projects and programmes in the borrowing plan were selected based on positive technical economic evaluations as well as the expected contribution to the socio-economic development of the country, including employment generation, skills acquisition, support towards the emergence of more entrepreneurs, poverty reduction and food security to improve the livelihood in all 36 states of the federation and federal capital territory.

“Considering the huge infrastructure deficit in the country and the enormous financial resources required to fill the gap in funding infrastructure in the face of dwindling financial resources, it has become imperative that we resort to prudent external borrowing to bridge the financial gap which will largely be applied to key infrastructure projects including power, railway health, among others.

“Given the nature of these facilities and the need to return the country to normalcy, it has become necessary to request the house of representatives to consider and approve the 2022-2024 External abridged borrowing (rolling) plan to enable the government to deliver its responsibility to Nigerians through expeditious disbursement and efficient Project Implementation.”

The president asked the lawmakers to give his request an “expeditious consideration and passage”.

Earlier in November, the president transmitted the borrowing plan to the national assembly. The request contained in the letter was $7.8 billion, €100 million.

The new sums indicate that the federal government has now increased its borrowing plan for 2022-2024.

NIGERIA’S DEBT

In September, the Debt Management Office (DMO) said Nigeria’s total public debt rose to N87.38 trillion in the second quarter (Q2) of 2023, recording an increase of 75.29 percent.

In the report released by the DMO, the agency said the surge was occasioned by the N22.71 trillion ways and means advances obtained by the federal government from the Central Bank of Nigeria (CBN).

In November, Wale Edun, minister of finance and coordinating minister for the economy, said the federal government needed to spend more but borrowing to fund its budgets was not sustainable.

“We have an existing borrowing profile. Our direction of tariff is to reduce the quantum of borrowing or intercepting deficit financing in the 2024 budget,” the minister had said.

“What is left for us to access those funds are expensive so it is the last thing that we must rely on.”

 

The Cable

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