The approved request came after the upper chamber considered a report by the Committee on Local and Foreign Debts during plenary.
The approved sum, according to the Chairman of the Local and Foreign Debt Committee, Clifford Ordia, would see €995 million going to finance priority projects of the Federal Government, while $1.5 billion would be disbursed to the thirty-six state governments to finance critical projects.
He explained that the loan would be sourced from the International Monetary Fund, World Bank, African Development Bank, Export, Import Bank of Brazil and the African Export, Import Bank.
According to Buhari, out of the total $5.513 billion loan request, the sum of $3.4 billion would be sourced from the International Monetary Fund; $1.5 billion from the World Bank; $500 million from the African Development Bank; and $113 million from the Islamic Development Bank.
He explained that a total of six indigenous assembly plants, one in each geo-political zone have been identified and would be rehabilitated to assemble completely knocked down CKD mechanisation farm machinery and equipment to be imported from Brazil.
According to the lawmaker, the CKD mechanisation to be imported would, specifically, be adapted for local conditions with job creation opportunities for citizens.
He emphasised that the loan is intended to be used to deliver technological package to small holder farmers for a fee through the establishment of service centres in each of the 774 local government areas to be owned and run by private business entities.
On providing fiscal support to states across the federation, Ordia disclosed that the sum of $750 million from the World Bank would be used to finance States Fiscal Transparency, Accountability and Sustainability (SFTAS) programme in all states of the federation and the Federal Capital Territory.
He noted that the said financing was approved by the National Assembly in June 2020 as part of the $1.5 billion Development Policy Financing to part finance the Federal Government’s 2020 revised budget deficit.
According to him, the Local and Foreign Debt Committee found that in October 2020, following the continuous economic disruptions occasioned by the pandemic and in view of the need to consolidate on and sustain the gains of the programme, it was pertinent to increase states fiscal capacity to respond to the COVID-19 crisis.
He added, “The committee found that the Federal Government’s objective of the restructuring is to support states to introduce measures to further mitigate fiscal shocks by introducing COVID-19 responsive Disbursement Linked Indicators at state level, to match the fiscal measures at the federal level.”
The lawmaker explained that another $750 million would be used to finance the COVID-19 action recovery and economic stimulus programme to support efforts by state governments to protect livelihoods, ensure food security and stimulate economic activity.
Contributing, Senator Solomon Olamilekan (APC, Lagos West) said going ahead to approve the loan request would demonstrate the proactiveness by the National Assembly to insulate the Nigerian economy against a possible decline.
“Embarking on this borrowing plan as explained by the chairman of the committee shows that we are being proactive”, he said.
On his part, Deputy President of the Senate, Ovie Omo- Agege (APC, Delta Central) while supporting the report of the Local and Foreign Debt Committee, sought to know if the committee in coming up with its recommendations was privy to the terms and conditions of the loan agreement.
Senator Betty Apiafi who raised viability concerns on projects to be financed at the state level, demanded to know if an arrangement was in place for maintenance of CKD farming machineries to be imported by the Federal Government from Brazil.
In his response to observations and concerns raised by his colleagues, Senator Ordia explained that the documentation of any loan request can only take place after the National Assembly gives its approval to the
In his remarks, the Senate President, Ahmad Lawan, said, “The comment by the DSP (Ovie Omo-Agege) in my understanding is to say you would be given the terms and conditions of the loan when the request is to be processed by your committee.