The house of representative has granted President Muhammadu Buhari’s request for a $5,803,364,553.50 loan.
The loan approval is occurring amidst Nigeria’s increase in public debt by N2.5 trillion in three months. This brings Nigeria’s debt to N38.005 trillion at the end of the third quarter (Q3) of 2021.
In May, Buhari requested loans in a letter he sent to the National Assembly as part of the 2018-2020 external borrowing strategy.
Batches of the loans have been granted. The national assembly authorised initial loan requests in the 2018-2020 borrowing plan totalling $8.3 billion and €490 million in July.
The lower legislative chamber also authorised a $10 million grant component.
After Ahmed Safana, head of the committee on local and international debts delivered a report during the plenary session on Tuesday, the house of representative granted Buhari’s loan request.
According to the loan breakdown, $2.5 million from the Geran Consortium will be used for the presidential power initiative’s grid modernisation and expansion program.
The Islamic Development Bank and the World Bank will grant N200 million and N90 million, respectively, to fund malaria-related projects in the health sector.
The Gurara phase one project will be funded with $786.38 million from China Eximbank. While the Nigeria Sustainable Water Supply, Sanitation, and Hygiene project will be financed with $700 million from the World Bank.
Solar cell production facility phases I and II, electric power transformer production plant I, II, and III, and high voltage testing laboratory, all of which are part of the National Agency for Science and Engineering Infrastructure (NASENI), are also expected to be funded with $276.9 million from the Chinese African Development Fund via the Bank of China.
The World Bank will fund four agro projects worth $1.450 billion for the Ministry of Agriculture: agro-processing productivity enhancement and livelihood improvement support, agro-climatic resilience in arid zone landscape, livestock productivity and resilience support project, and value chain development programme.
“The terms and conditions of the loan from the funding agencies be forwarded to the national
assembly before the execution of same for approval and proper documentation,” the green chamber says.
Nigeria’s Debt Increase
As earlier said, Nigeria’s debt increase has reached a total of N38.005 trillion. It covers the federal government’s entire foreign, internal debts and the obligations of 36 state governments and the federal capital territory.
When compared to the N35.46 trillion recorded at the end of June 2021, the debt figure has increased by N2.54 trillion in just three months.
In a statement released on Tuesday, the Debt Management Office had said the increase was due to the federal government’s $4 billion Eurobonds issued in September.
The issuing of $4 billion Eurobonds, according to the agency, helped to boost the country’s external reserves.
The DMO statement reads:
“In line with its practice, the Debt Management Office has published Nigeria’s Total Public Debt as of September 30, 2021. The Data, which includes the Total External and Domestic Debts of the Federal Government of Nigeria, thirty-six State Governments, and the Federal Capital Territory, shows that Nigeria’s Public Debt was N38.005tn or $92.626bn at the end of Q3 2021.
The increase of N2.540tn, when compared to the corresponding figure of N35.465 trillion at the end of Q2 2021, was largely accounted for by the $4bn Eurobonds issued by the Government in September 2021,
The issuance of the USD4 billion Eurobonds has brought significant benefits to the economy by increasing the level of Nigeria’s External Reserves, thereby supporting the Naira Exchange Rate and providing the necessary capital to enable the Federal Government to finance various projects in the Budget,
The triple tranche $4bn Eurobond, issued in September 2021, was for the implementation of the New External Borrowing of $6.18bn in the 2021 Appropriation Act.”