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Buhari wants N’Assembly’s nod to raise N2.3bn to finance 2021 budget deficit

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The Senate on Tuesday received a request from President Muhammadu Buhari to raise the sum of N2,343,387,942,848 from multilateral and bilateral lenders, as well as the International Capital Market (ICM) through the issuance of Eurobonds.

The amount which is equivalent to USD$6,183,081,643.40 at the Budget Exchange Rate of USD$1/N379, is captured as New External Borrowing in the 2021 Appropriation Act (Item No.330), and meant to part-finance this year’s Budget Deficit of N5.602 trillion.

The request was contained in a letter addressed to the Senate President, Ahmad Lawan, and read during plenary.

According to the President, the request was made in line with the provisions of Sections 21(1) and 27(1) of the Debt Management Office (Establishment) Act, 2003.

He disclosed that Nigeria may be able to raise USD$3 billion or more, in a combination of tenors between 5 – 30 years.

Buhari explained that the Federal Government’s decision to raise the sum from the International Capital Market was due to the recent monetary policy stance that provides for very low interest rates and ease of moderating debt service cost.

He further disclosed that the proceeds of the USD6.183 billion (N2.343 trillion New External Borrowing in the 2021 Appropriation Act) would be used to fund specific Capital Projects in the Budget.

According to him, such projects are captured in 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.

President Buhari’s letter, “Request For the Resolution of the National Assembly For: The Implementation of the New External Borrowing of N2.343 trillion (about USD6.183 Billion) In the 2022 Appropriation Act”, reads in part:

“The purpose of this Letter is to request for a Resolution of the National Assembly (NASS) to raise the sum of N2,343,387,942,848.00 (about USD 6,183,081,643.4O at the Budget Exchange Rate of USD1.00/N379) provided as New External Borrowing in the 2021 Appropriation Act (Item No. 330) to part-finance the Budget Deficit of N5.602 trillion.

“This request is in line with the provisions of Sections 21(1) and 27(1) of the Debt Management Office (Establishment, Etc.) Act, 2003 (DMO Act). Section 21(1) of the DMO states that “no external loan shall be approved or obtained by the Minister unless its terms and conditions shall have been laid before the National Assembly and approved by its Resolution”; while Section 27(1) states that the National Assembly may by a resolution approve, from time to time, standard terms and conditions for the negotiation and acceptance of external loans and issuance of guarantees”.

Implementation of the New External Borrowing in the 2021 Appropriation Act

“The President of the Senate may wish to recall that the 2021 Appropriation Act provides for N4,686,775,885,696.00 as New Borrowings(Item No. 328) to part-finance the 2021 Fiscal Deficit, of Which 50% or N2,343,387,942,848.00 (about USD 6,183,081,643.40 at the Budget Exchange Rate of USD1.00/N379) is specified as New External Borrowing.

“The President of the Senate may also wish to note that the allocation of #2.343 trillion to New External Borrowing in the 2021 Appropriation Act is consistent with the Nigeria’s Debt Management Strategy, which seeks amongst other objectives, to moderate

debt service costs by accessing relatively cheaper external funds, and to free-up space in the  domestic market for other borrowers.

Funding Plan

“I wish to bring to the attention of the President of the Senate that the plan is to raise the sum of USD 6.183 billion from a combination of sources; namely: multilateral and bilateral lenders, as well as from the International Capital Market (ICM) through the issuance of Eurobonds.

“From recent bends in the ICM, it is now possible for Nigeria to raise funds in the ICM and this explains why we are proposing that the New External Borrowing in the 2021 Appropriation Act, should include issuing Eurobonds in the ICM.

“We estimate that Nigeria may be able to raise USD 3 billion or more, but not more than USD 6.183 billion (the amount provided in the 2021 Appropriation Act) in a combination of tenors between 5 30 years; the outcome would, however, be determined when Nigeria approaches the market.

“The President of the Senate may further wish to note that not only is the ICM now open to issuers like Nigeria and Interest Rate lower than the levels in 2020, given the recent monetary policy stance, as well as, rising levels of inflation, the level of liquidity in the domestic market has decreased while. domestic Interest Rates are beginning to rise.

“Therefore, accessing the ICM will be relatively cheaper thereby moderating debt service cost, and it will also contribute to the level of External Reserves.”

Utilisation of Proceeds of New External Borrowing

“The proceeds of the USD6.183 billion N2.343 trillion New External Borrowing in the 2021 Appropriation Act) will be used  to found specific Capital Projects in the Budget.

“This includes projects from priority sections 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.”

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Defence and Security

Army Has No Desire To Truncate Nigeria’s Democracy — COAS

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Chief of Army Staff (COAS), Lieutenant General Taoreed Lagbaja
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The Chief of Army Staff (COAS), Lieutenant General Taoreed Lagbaja, on Tuesday, restated the commitment of the Nigerian Army to defend the nation’s choice of government, democracy.

Addressing participants at a seminar on career planning and management organised by the Army headquarters, the COAS said the Army has no plans to truncate democracy in the country.

He charged officers of the Nigerian Army to remain above board in the discharge of their professional duties.

“Permit me to seize this opportunity to reiterate that the Armed Forces of Nigeria, particularly the Nigerian Army has come to terms with the country’s choice of democracy as the preferred system of governance,” he said during his address to officers.

“We are therefore agents of democracy and have no desire to truncate it. The Nigerian Army will continue to defend our constitution and not suspend it for whatever reason.

“It is the duty of our elected leaders to lead while the military does its job as enshrined in our constitution. Nigerian Army personnel must therefore remain professional and be above board as they discharge their constitutional duties.”

The commitment by the COAS followed the series of putsches in West and Central Africa which have experienced at least seven military takeovers in the last four years.

Mali, Guinea, Burkina Faso, and most recently, Niger Republic — all members of the Economic Community of Western African States ( ECOWAS) — have pulled out from the regional bloc in last four years. Outside of West Africa, Chad and Sudan also experienced military coups in 2021.

 

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Defence and Security

Economic: Defence Chief Warns Coup Advocates

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The Chief of Defence Staff, General Christopher Musa, has warned against advocating for a coup due to economic hardship, emphasizing patience and the superiority of democracy.

He made this known on Thursday while speaking with journalists at the Nigerian Army 6 Division Headquarters in Port Harcourt, the Rivers State capital, after commissioning some building projects.

General Musa urged individuals promoting military takeover to cease such statements.

The Chief of Defence Staff had earlier commissioned the newly constructed Entrance Gate and Officers Transit Accommodation at the 6 Division Headquarters.

Protests have occurred in Ogun, Oyo, Kano, Niger and some parts of the country in the last few weeks over the hardship experienced in the country as Nigerians lament food inflation, high cost of living, amongst other harsh living conditions occasioned by the removal of petrol subsidy, forex crisis, amongst others.

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Defence and Security

Security: Bill To Introduce State Police Scales Second Reading

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Federal House of Representatives
Federal House of Representatives
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A Constitution Amendment Bill to introduce state police has scaled second reading in the House of Representatives.

The bill, which was sponsored by 13 members of the House, enjoyed support from majority of the lawmakers in the green chamber who believed that concerns of political victimisation by state governors, should take the backseat to the current state of insecurity across the country.

Last week, President Bola Tinubu and 36 state governors considered the creation of state police as solution to the menacing security challenges like kidnapping and banditry ubiquitous in the country.

State police has been a subject of controversy since the Seventh National Assembly and has failed to make it through the amendment phase.

Governors elected on the platform of the Peoples Democratic Party (PDP) had recently restated their position on state policing, as the solution to the country’s worsening security situation, lamenting that Nigeria is “almost on the road to Venezuela”.

Also, regional socio-political groups such as Afenifere, Ohanaeze Ndigbo, Middle Belt Forum, and the Northern Elders’ Forum, have repeatedly called for state police as solution the myriad of increasing security challenges confronting the nation.

Already, states in the South-West geopolitical zone have formed the Amotekun while their counterparts in the South-East also created state-owned security outfit Ebube Agu. The Benue Guards has also been operational in Benue State in the North Central while states like Katsina, Zamfara and other bandit-prone sub-nationals have also come up with similar state-established outfits.

However, these outfits have not been effective as anticipated as they don’t have the backing of the Federal Government or the Presidency while states continue to demand that Amotekun, Ebube Agu and others are granted license to bear assault rifles like AK-47 to confront lethal gun-toting marauders.

 

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