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Senate approves Buhari’s $2.6bn Loan Request

approved

 

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.

Out of the total sum ap­proved, $1.5 billion is to be sourced from the World Bank; €671 million from the Export-Import Bank of Bra­zil; and another €324 million from the Deutsche Bank of Germany.
The tenor/moratorium of the loan to be sought from the World Bank is 25 years at an interest rate of 2.45 percent per annum; while that from the Export-Import Bank of Brazil is for 15 years at an interest rate of 2.935 percent; and the loan request from the Deutsche Bank of Germany for seven years at 2.87 percent interest rate.

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.

However, Chairman of the Senate Committee on Local and Foreign Debt, Clifford Ordia (PDP, Edo Central), while giving a breakdown on the application of the sum approved by the National Assembly, disclosed that €995 million would be deployed to finance priority projects to address the impact of the COVID-19 pandemic and to improve Nigeria’s food secu­rity through the mechanisa­tion of agriculture and agro processing in Nigeria.

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 committee notes that it is based on the above restructuring, that additional financing in the sum of $750 million is now required for the COVID-19 response of Ni­geria”, Ordia said.

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.

According to the lawmak­er, “The bulk of what is con­tained in this report is for the states – the thirty-six states of the federation. Out of this, only €995 million is for the Federal Government; while $1.5 billion is to the state gov­ernments.”

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.

 

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