The Senate has approved the sum of $1.5bn and €995 million external borrowings for the Federal government.
This is despite the huge debt burden incurred by the President Muhammadu Buhari led administration.
This was sequel to the consideration and adoption of the report of the Senate Committee on Local and Foreign Debts, chaired by Senator Clifford Ordia (Edo Central).
The loans were part of the external borrowings President Muhammadu Buhari had requested in May 2020, for the Red Chamber to approve for financing various priority projects of the federal government and to support the state governments facing fiscal challenges.
Senator Ordia, while presenting the report, said $1.5bn will be sourced from the World Bank to finance projects of state governments facing fiscal challenges arising from the COVID-19 pandemic.
The projects, according to Ordia, are States Fiscal Transparency, Accountability and Sustainability program to provide fiscal support to states (SFTAS) and COVID-19 Action recovery and economic stimulus program to support State-Level efforts to protect livelihoods, ensure food security and stimulate economic activity (N-CARES).
The €995 million to be sourced from the Export-Import Bank of Brazil is to finance the federal government’s Green Imperative Project to enhance mechanization of agriculture and agro process in Nigeria to improve food security.
Senator Ordia noted that the borrowings were largely concessional loans with low interest rates and a reasonable moratorium and payback period.
He said, “The Committee most importantly notes that the indicative terms and conditions under which the loan will be borrowed, have no unusual or onerous conditions attached and the terms do not in any manner compromise the sustainability of the Nigerian economy or impugn the integrity and independence of Nigeria as a sovereign Nation.
“The Committee finally notes that the Loan is in the immediate best interest of the Nigerian State and its citizens in dealing with the COVID-19 pandemic in a way that the economy will be positioned for quick recovery and resume growth.
He noted that while Nigeria’s Total Public Debt Stock is on the increase, it is still relatively low vis-d-vis the country’s GDP and the increased borrowing requirements is needed to sustain the economic recovery.”
He therefore pointed out that the loan styled Covid-19 Action Recovery and Economic Stimulus (CARES) is to support budgeted State Government interventions of the 36 States and the Federal Capital Territory in their effort to mitigate the impact of the Covid -l9 pandemic on the livelihoods of poor and vulnerable households and micro enterprises.
He pointed out that the interventions are intended to target existing and newly vulnerable and poor households, farmers, Micro and Small Enterprises (MSEs) affected by the Economic crises caused by the pandemic.
The Committee said the financing will be used to support scaling up existing safety net interventions at the State level by expanding the coverage of Social Transfers, and Labour intensive Public Works opportunities in the social sectors, Livelihood Grants and Social Services Infrastructure micro projects.
He indicated that the financing will be used to support scaling up of intervention that will help farmers increase food production and facilitate smooth functioning of the food supply chain.
He further noted that the financing will also be used to support scaling up interventions that will help MSEs through grants to support post COVID 19 loans, grants to support operational cost.
He said, each State is entitled to access $20,000,000 grant under the program provided that it achieves a minimum of 4 Disbursement Linked Indicators. The PCT is entitled to $15,000,000.
Odia observed that the financing for the GIP, Additional financing for SFTAS and CARES are being sourced from Multilateral and Bilateral global Lenders and partners with proven track record of previous financial accommodation and support to Nigeria.
The Committee notes that the borrowings are largely concessional loans with low interest rates and a reasonable moratorium and payback period.
The chairman said most importantly that the indicative terms and conditions, under which the loan will be borrowed, are not with unusual or onerous conditions attached adding that the terms do not in any manner compromise the sustainability of the Nigerian economy or impugn the integrity and independence of Nigeria as a sovereign Nation.