Se­nate Ap­proves $5.5bn For­eign Loan as Ex­ter­nal Debt Rises to $15.4bn

THISDAY - - FRONT PAGE - Damilola Oyedele in Abuja and Obinna Chima in La­gos

The Se­nate yes­ter­day ap­proved the re­quest by the ex­ec­u­tive to raise $3 bil­lion from the in­ter­na­tional cap­i­tal mar­ket (ICM) through a Eurobond or Di­as­pora Bond is­sue or a com­bi­na­tion of both to re­fi­nance ma­tur­ing do­mes­tic debts, and raise an­other $2.5 bil­lion from mul­ti­lat­eral donor in­sti­tu­tions to fund the cap­i­tal com­po­nent of the 2017 bud­get.

The ap­proval co­in­cided with the lat­est data re­leased by the Debt Man­age­ment Of­fice (DMO) yes­ter­day

show­ing that Nige­ria’s debt stock hit N20 tril­lion as of Septem­ber 30, 2017, with the for­eign com­po­nent ac­count­ing for 23.04 per cent or N4.694 tril­lion ($15.40 bil­lion) of the to­tal debt stock.

The ap­proval by the Se­nate fol­lowed the adop­tion of the rec­om­men­da­tions of its Com­mit­tee on Lo­cal and For­eign Debts chaired by Sen­a­tor Shehu Sani (Kaduna, APC).

But be­fore the loan re­quest was ap­proved, the Deputy Pres­i­dent of the Se­nate, Sen­a­tor Ike Ek­w­ere­madu who presided over yes­ter­day’s ple­nary, had charged the DMO to mon­i­tor Nige­ria’s debt pro­file to en­sure it re­mains within ac­cept­able lim­its.

“Let me state clearly that this Se­nate will con­tinue to part­ner with the fed­eral gov­ern­ment on mat­ters that con­cern the or­di­nary peo­ple of Nige­ria. The im­ple­men­ta­tion of the 2017 bud­get is key be­cause any Ap­pro­pri­a­tion Act that is not im­ple­mented is worth­less,” he said.

Sen­a­tor Yusuf Abubakar Yusuf (Taraba APC) said while bor­row­ing to re­fi­nance lo­cal debt could be deemed a good model, the gov­ern­ment must be care­ful as its work­a­bil­ity would de­pend on Nige­ria’s for­eign re­serves and ex­change rate sta­bil­ity.

“If our for­eign ex­change rate is very low, if it fall as low as N500 to a dol­lar, we are go­ing to have a very se­ri­ous chal­lenge gen­er­at­ing enough for­eign ex­change to pay our for­eign debt.

“We have to be seen to be a lot more cau­tious, not just say­ing that the in­ter­est rate (for ex­ter­nal bor­row­ing) is low and the cost of re­fi­nanc­ing the loan will be low.

“We must also take cog­ni­sance of the fact that what­ever hap­pens will have an im­pact on our for­eign ex­change rate,” Yusuf said.

Also con­tribut­ing to the de­bate, Sen­a­tor Gbenga Ashafa (La­gos APC) said the loan was crit­i­cal to the suc­cess of the 2017 bud­get.

“If we con­sider the projects that these loans are sup­posed to fund, they are spread across all the geopo­lit­i­cal zones. They cov­ers power, rail, roads, wa­ter and oth­ers,” he said.

Last Oc­to­ber, Pres­i­dent Muham­madu Buhari had sought ex­pe­di­tious ap­proval of the for­eign loan re­quest.

Some of the projects to be funded from the loans in­clude the Mam­billa hy­dropower project, sec­ond run­way at the Nnamdi Azikiwe in­ter­na­tional Air­port, Abuja, coun­ter­part fund­ing for rail projects, and the con­struc­tion of the Bodo-Bonny road.

Also at ple­nary yes­ter­day, the Se­nate man­dated its Com­mit­tees on Fi­nance and Bank­ing, In­sur­ance and Fi­nan­cial In­sti­tu­tions to in­ves­ti­gate al­le­ga­tions of un­remit­ted rev­enue from stamp du­ties in the last five years.

This, it said, was due to the need to har­ness all sources of rev­enue to the gov­ern­ment and curb all forms of waste­ful­ness, cor­rup­tion and di­ver­sion of funds.

The res­o­lu­tion fol­lowed a mo­tion spon­sored by Sen­a­tor John Owan Enoh (Cross River, PDP) and eleven oth­ers who ex­pressed con­cern over re­port by the School of Bank­ing Hon­ours that showed that over N7 tril­lion in stamp du­ties from cash­less trans­ac­tions re­mained un­paid to the fed­er­a­tion since 2015.

The mo­tion stated: “Wor­ried that the pro­vi­sion for stamp duty in the rev­enue frame­work of the na­tion’s an­nual bud­get for 2015, 2016 and 2017 had been N8.713 bil­lion, N66.138 bil­lion and N16.96 bil­lion, re­spec­tively de­spite the above re­port.

“We have been ap­prised of the anti-stamp du­ties col­lec­tion stance of the Nige­rian in­ter-Bank Set­tle­ment Sys­tem (NIBSS) which is cur­rently be­ing ac­cused of sys­temic di­ver­sion of huge rev­enue flows from stamp duty col­lec­tion on elec­tronic trans­fer re­ceipts on on­line bank­ing trans­ac­tions and the ne­ces­sity to de­mand no­tice on all un­remit­ted stamp du­ties.”

Owan also queried how the pro­jec­tion on stamp du­ties dropped from N66 bil­lion in 2016 to N16.9 bil­lion in 2017.

Adopt­ing the prayers of the mo­tion, the Se­nate com­mended the School of Bank­ing Hon­ours for bring­ing the is­sue of un­remit­ted rev­enue from stamp du­ties to the pub­lic’s no­tice, and for in­sist­ing on pro­bity of the NIBSS.

The School of Bank­ing Hon­ours is a body cor­po­rate ap­proved through reg­is­tra­tion by the Nige­rian Copy­rights Com­mis­sion, to re­search into bank­ing op­er­a­tions, fa­cil­i­tate col­lab­o­ra­tion be­tween banks, en­sure col­lab­o­ra­tion be­tween banks and the gov­ern­ment, and rep­re­sent the gov­ern­ment in fa­cil­i­tat­ing the im­po­si­tion and mon­i­tor­ing of stamp du­ties on all elec­tronic cash trans­ac­tions. To­tal Debt Rises to N20tn Mean­while, data re­leased yes­ter­day by the DMO has shown that Nige­ria’s to­tal pub­lic debt stock, com­pris­ing the fed­eral gov­ern­ment, states and the Fed­eral Cap­i­tal Ter­ri­tory (FCT) stood at N20.373 tril­lion as of Septem­ber 30, show­ing a mar­ginal in­crease of 3.6 per cent from N19.637 tril­lion as of June 30.

A break­down of the coun­try’s debt stock, ac­cord­ing to a state­ment, in­di­cated that do­mes­tic debt ac­counted for 76.96 per cent of the to­tal debt stock while ex­ter­nal debt ac­counted for 23.04 per cent.

The DMO put the do­mes­tic debt stock at N15.679 tril­lion, an in­crease of 4.1 per cent com­pared with N15.034 tril­lion as of June 30.

On the other hand, ex­ter­nal debt stock stood at N4.694 tril­lion ($15.390 bil­lion), re­flect­ing a mar­ginal rise of 1.9 per cent from N4.602 tril­lion as of June 30.

“The debt data lends cre­dence to the gov­ern­ment’s claims that the pub­lic debt stock is skewed in favour of do­mes­tic debt which is partly re­spon­si­ble for the high debt ser­vice fig­ures,” the state­ment ex­plained.

Newspapers in English

Newspapers from Nigeria

© PressReader. All rights reserved.