Senate okays N2.343trn external loan, warns MDAs on frivolous spending, passes N982bn supplementary budget


The Senate Wednesday approved President Muhammadu Buhari’s request for the authorisation of N2.343 trillions! ($6.183 billion USD) as External Borrowing in the 2021 Appropriation Act. 

The upper chamber, which warned Ministries, Departments and Agencies(MDAs) against  frivolous spending,   also directed Minister of Finance, Budget and National Planning Zainab Ahmed, Director General  Debt Management Office Patience Oniha, and  Governor Central Bank of Nigeria(CBN) Godwin Emefiele, to submit to the National Assembly within 10 working days (excluding the day of close of trading), a letter containing the United States Dollars amount so raised and received as a result of the approval together with the applicable exchange rate.

The sum is expected to be sourced through the Issuance of Eurobond in the International Capital Market. 

 The approval by the upper chamber followed the consideration of a report by the Committee on Local and Foreign Debts. 

 Chairman of the Committee, Senator Clifford Ordia (PDP, Edo Central) said,  in considering the president’s request, the committee noted the serious concerns of Nigerians about the level of sustainability and servicing of Nigeria’s External Borrowing. 

 Ordia said: “Due to the shortfall in our annual revenues in relation to our need for rapid infrastructural and human capital development, we had to pass deficit budget every year requiring us to borrow to finance the deficit in our budget.”

 Ordia explained that the new borrowing was calculated at the exchange rate of USD1/N379, and raised from multiple sources–multilateral and bilateral lenders through the issuance of Eurobonds in the International Capital Market. 

 He said the proceeds of the USD$6.183 would be used to fund various specific capital projects, specifically from priority sectors of the economy namely; power, transportation, agriculture, and rural development, education, health, provision of counterpart funding for multilateral and bilateral projects, defence and water resources. 

 The lawmaker disclosed that the final terms and conditions–the interest rate and tenors in the case of Eurobonds – can only be determined at the point of issuance of the Bonds in the International Capital Market and would be subject to market conditions prevailing at the time of issuance. 

 He added that the primary listing of the bond would be on the London Stock Exchange while the secondary listing would be on the Nigerians Stock Exchange and Financial Markets Dealers Quotations (FMDQ) Securities Exchange. 

Ordia observed that “multilateral and bilateral institutions operate on standard terms and conditions and Nigeria secures the best terms and conditions within the context of the market.”

 Accordingly, while adopting the resolutions of the Committee on Local and Foreign Debt, the Senate  approved the issuance of $3 billion USD but not more than $6,183,081,643.40 Eurobond in the International Capital Market for the implementation of the new External Borrowing of N2,343,387,942,848, for the financing of part of the deficit authorized in the 2021 Appropriation Act. 

 It also approved that the amount authorised may be raised from multiple sources such as the International Capital Market and any other Multilateral or Bilateral sources as may be available. 

 In addition, the upper chamber directed the Minister of Finance, Budget and National Planning, DMO Director General the CBN governor to submit to the National Assembly within ten working days (excluding the day of close of trading) a letter containing the United States Dollars amount so raised and received as a result of the approval together with the applicable exchange rate. 

Lawan clarifies  

In his remarks, President of the Senate, Ahmad Lawan, clarified that the approved external borrowing is not a fresh loan by the Buhari administration but a request captured in the 2021 Appropriation Act passed by the National Assembly last year. 

 He, however, tasked committees of the National Assembly to carry out strict oversight on how the loans were applied to the implementation of the 2021 budget.

Lawan urged Ministries, Departments and Agencies of Government (MDAs) entrusted with the management of the funds to ensure prudent application to projects across the country. 

 “Our committees should be alert on how the funds that will be borrowed will be used. 

“No frivolous expenditures should be entertained. I imagine that everybody in the trust of public funds, especially these loans, will be as prudent and economical as possible”, he said. 

…Lawmakers pass N982bn

 Meanwhile, the Senate passed N982 .729billion as supplementary budget as against N895.842billion requested for by President Muhammadu Buhari, indicating an increase of N87 billion.

The passage of the bill was sequel to consideration of report submitted to that effect by its Committee on Appropriations. 

 In the report presented by the committee Chairman, Senator Jibrin Barau (APC Kano North) said the jerking up of the N895billion supplementary budget request to N982billion, was necessitated by the need for adequate funding of the underfunded security agencies.

“The Committee in line with the harmonised position with its House of Representatives counterpart is recommending an upward review of the funding of some security agencies that were grossly underfunded or not funded in supplementary appropriation bill like the Nigerian Navy, Ministry of Police Affairs, Defence Intelligence Agency, Department of State Security Services and Economic and Financial Crimes Commission (EFCC)”, the report stated. 

 Out of the N982.729billion passed, N123.332billion is for recurrent expenditure while the balance of N859.397billion is for contribution to the Development Fund for Capital Expenditure for the year ending on 31st December, 2021

 Out of the capital vote, the Nigeria Air Force has the highest allocation of N239.477billion, followed by the Nigeria Army with N207.543billion, Nigerian Navy N157.780billion and Defence Headquarters with N33.673billion.

 Police formations and Commands were allocated N22.586billion, Defence Space Administration N43.326billion, Office of the National Security Adviser N17billion and Department of State Services N17billion.

 In the health component of the capital votes, N60.728billion WAs allocated for vaccine procurement against COVID-19 while N6.715billion was earmarked for procurement and installation of new oxygen plants nationwide and repairs of oxygen plants in FCT Hospitals.

 Speaking after the passage, Senate President Lawan, advised the federal government to sustain adequate funding of security agencies in the 2022 budget to be presented to the National Assembly later this year. 

 He said doing so remains a sure way to overcome the lingering security challenges faced by the country. 

 “This supplementary budget is targeted at addressing the security challenges in this country and, of course, the procurement, administration and management of the Covid-19 vaccines.

“We expect the relevant committees to be stiff, to be alive to their responsibilities for over sighting on how these funds would be deployed prudently.

 “It is very important that we have a review of the application of these funds before we pass the 2022 Appropriation Bill. 

 “This is a very necessary intervention by the National Assembly, particularly this Senate and, indeed, the administration in the country that this is necessary for us to do. 

 “(And) we should continue with funding of our security agencies in the 2022 Appropriation because we have to overcome the security challenges our country faces,” Lawan said.