COVID-19: FG seeks $5.513bn external loan
President Muhammadu Buhari has sought the National Assembly approval for a fresh $5.513bn external borrowing to finance the revised 2020 budget deficit.
Buhari, in separate letters to Senate President Ahmad Lawan and House of Representatives Speaker Femi Gbajabiamila, dated May 19, said the challenges posed by the COVID-19 pandemic, which had resulted in the sharp decline of oil price, compelled his government to source for loans to finance budget deficit.
He said: "As the Senate may be aware, the COVID-19 Pandemic has resulted in economic and fiscal challenges for many countries.
"Nigeria has also been affected in this regard, especially with the lower demand for crude oil, which has affected our sales and the sharp decline in the price of oil below $25 per barrel, which is much lower than the $57 per barrel benchmark in the 2020 Appropriation Act.
"The COVlD-19 pandemic has also created the need of additional expenditure in the health sector. All of these have necessitated a review of the 2020 budget and the Medium-Term Expenditure Framework (2020-2022).
"The draft revised budget proposed by the executive for 2020 has a higher deficit. In order to finance the deficit, the Federal Government is planning to raise funds from both domestic and external sources.
"For the external component, the government is negotiating with multilateral institutions for funding on concessionary terms."
The Senate had, on March 5, 2020, approved $22.7bn foreign loan request from the president. However, the House of Representatives is yet to approve the loan.
Buhari, in the latest letter, sought to raise the loan from multilateral institutions.
He said $3.4bn would be sourced from the International Monetary Fund; $1.5bn from World Bank; $500m from the African Development Bank and $113m from the Islamic Development Bank.
Buhari also said the loan was to finance priority projects of the Federal Government and projects to support the state government.
To fund the federal government priority projects, the president sought to borrow $600m to support Nigeria’s response to challenges of COVID-19; $125m from the AfDB for strengthening of healthcare system to improve response to COVID-19; and $23m for financing smallholder farmers to mitigate food security impacts of COVID-19.
Others are $500m from the African Export-Import Bank for the provision of critical medical supplies to combat COVID-19 and 995m Euro from ExportImport Bank of Brazil to enhance mechanization of agriculture and agro processing in Nigeria.
Buhari also sought to borrow from World Bank: (a) between $500m and $750m for State Fiscal Transparency Accountability and Sustainability Programme to provide fiscal support to the states.
(b) between $500m and $750m for COVID-19 Action Recovery and economic Stimulus Programme to Support State level efforts to protect livelihoods, ensure food security and stimulate economic activities.