As N’Assembly Considers a New $5.513bn Loan Request…

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A request by President Muhammadu Buhari for the federal government to access a $5.513bn loan to fund the proposed amended 2020 Appropriation Bill, has received the attention of the two chambers of the National Assembly and currently under serious considerations, report Deji Elumoye and Udora Orizu

Members of the National Assembly last Thursday cut short their Sallah break billed to end on Tuesday, June 2, to consider two formal requests from President Muhammadu Buhari seeking approval of the parliament for an amendment to the 2020 Appropriation Bill as well as sourcing $5.513 billion foreign loan to fund the proposed review of the 2020 budget.

The two request letters dated May 19 and addressed to both President of the Senate, Dr. Ahmad Lawan and Speaker of the House of Representatives, Hon Femi Gbajabiamila, were read at plenary of the two chambers by the presiding officers.

In his loan request for $5.513 billion to finance budget deficits, Buhari said the revised budget draft proposed by the executive for 2020 has a higher deficit and in order to finance the deficit, the federal government plans to raise funds from both domestic and external sources.

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 the President, ‘’For the external component, the government is negotiating with multilateral institutions for funding on concessionary terms. A total of $3.4 billion will be borrowed from International Monetary Fund, $1.5 billion from World Bank, $500 million from African Development Bank and $133 million from Islamic Development Bank, totaling the amount to $5.513 billion.’

‘’In addition to the financing required for the revised 2020 budget, financing is also required for some priority projects of the federal government to address the covid-19 pandemic and improve Nigeria’s food security.

“The Islamic development bank has indicated that only 113 million dollars of financing will be available to the Federal government in the 2020 fiscal year to finance the government’s covid-19 response, which will come from restructuring of previously approved but inactive facilities for Nigeria.’

‘’For facilities for projects to support state governments in their fight against covid-19 pandemic, comes under ‘’State fiscal transparency accountability and sustainability program to provide fiscal support to the states, Covid-19 action recovery and economic stimulus programme to support state-level efforts to protect food security and stimulate economic activity’’. Amount between $500 million and $750 million and lender is the World Bank.’’

On the revised 2020-2022 MTEF/FSP and appropriation Act 2020, the President said it has become imperative to adjust expected revenues, considering the widespread disruption in other domestic economic activities as well as international trade and transportation due to covid-19, adding that it’s further necessary to reallocate resources in the Appropriation Act to ensure effective implementation of required emergency measures to mitigate the negative socioeconomic effects of the covid-19 pandemic.

The Senate had in March given a speedy approval to President Muhammadu Buhari’s plan to borrow $22.7 billion from external creditors to finance infrastructure projects.

The Senate’s approval of President Buhari’s $22.79 billion external borrowing request on March 5, stirred the hornet’s nest especially, among the Southeast caucus of the Ninth National Assembly that faulted the non-inclusion of Southeast zone among the zones to benefit from the 34 infrastructure projects to be executed with the loan.

The President, however, explained that the external borrowing plan target-projects cut across all sectors. The loan if approved, he said, would be used to execute key infrastructure projects across the country.

According to the document accompanying the President’s request, the loan would be spread across many financial institutions. Over 70 per cent of the loan would come from the Exim Bank of China, while the remaining funds will come from the World Bank and Africa Development Bank, among others.

The breakdown is as follows: Exim Bank of China ($17bn), World Bank ($2.95bn), Africa Development Bank ($1.88bn), Islamic Development Bank ($110m), Japan International Cooperation Agency ($200m), German Development Bank ($20m) and French Development Agency ($480m).

After the Senators eventually approved the loan request, it took the Southeast caucus of the National Assembly one whole week to express their reservations on the loan.

The lawmakers made up of Senators and House members from the zone thereafter resolved to separately meet with the leadership of both the Senate and House over the loan request approved by the Senate.

Immediate past Deputy Senate President, Senator Ike Ekweremadu, who is the Leader of the Southeast caucus in the National Assembly led the ‘protesting’ Southeast legislators to the meeting.

On the part of the House, the consideration of the loan request was kept on hold, due to a petition by a member, Hon. Henry Nwawuba on behalf of Southeast Leaders, under the aegis of Southeast Elite, who described the loan as illegal.

Nwawuba, at plenary, earlier stressed that the borrowing and procedure being used were against the norms, laws and constitution of Nigeria.

Following Nwabuba’s petition, Gbajabiamila, revealed that further discussion on the federal government’s request to borrow $22.7 billion was stepped down, because of the exclusion of the Southeast as one of the beneficiaries of the loan.

Again, last April the Senate speedily approved another N850 billion loan request by President Buhari. The president had said the loan, which will be sourced from domestic capital market, was needed to finance projects and programmes in the 2020 budget.

The President’s message was conveyed in a letter read out by the Senate President at the start of plenary.

At Senate plenary last Thursday, the principle of the revised 2020 Appropriation Bill was subjected to general debate with Senate Leader, Senator Yahaya Abdullahi leading the deliberations and other Senators contributing.

Abdullahi said most of the assumptions underpinning the 2020 FGN Budget have to be revised in the face of current realities, as Nigeria is vulnerable to the current global economic disruption caused by the Covid-19 crisis, which has led to decline in Crude-oil prices and spikes in risk aversion in the global capital markets.

“Prior to the outbreak of Covid-19 Pandemic, the Nigerian economy had been characterized by wavering external sector and improving internal economic indicators. Over-dependence on oil revenue, constrained fiscal space, low foreign and domestic investments and declining foreign reserves made the economy disproportionately vulnerable to the twin shocks of crude oil price/production collapse and a health crisis affecting negatively the informal sector which accounts for over half of the Nigeria’s GDP.

“Following the revision of key macroeconomic parameter, projected oil revenues for 2020 have been significantly reduced. Adjusted downwards also are non-oil revenue projections, including various tax and customs receipts. Additionally, the First-Line deductions by NNPC for Federally Funded Upstream Projects/Expenditures have been significantly reduced by 65% from N1.223 trillion to N424.23 billion,” he said.

In his contribution, Chairman of the Senate committee on Judiciary, Human Rights and Legal Matters, Senator Opeyemi Bamidele questioned why part of the N85billion reduced from the earlier approved 2020 budget is N11billion deducted from the N110billion capital votes allocated to the Judiciary in the previous budget.

Kicking against the proposal, Bamidele said the earlier votes of N110billion given the Judiciary was not in anyway enough to drive efficiency within the arm of government, let alone N99billion it is reduced to now.

“Many of the courts have no air conditioners and functional public address system, which were expected to be procured through the earlier approved votes. I most humbly submit very strongly that the N110billion approved for the arm of government should be retained in the revised proposal if it cannot be increased”, he said.

On his part, Chairman of the Senate committee on Public Accounts, Senator Mathew Urhoghide, called for caution on the increased external loans obtained by federal government, because according to him, the latest move has jerked up debt serving for the 2020 fiscal year from N2.4 trillion to N3 trillion.

He also called for specifics on proposed N213.5billion COVID-19 intervention fund in knowing exact amounts to be expended on what and what.

At the House, the Majority Leader, Hon. Ado Doguwa, who led the general debate on the revised budget urged the lawmakers to support the government in the direction taken to revise the budget, so as to be able have a more robust economy and get out of the crisis caused by the covid-19 pandemic.

According to him, after robustly engaging the executive arm of government, and minister of finance, they found it necessary to look at the budget in relationship with the realities, which is on ground.

He noted that whatever they are going to have in terms of amendment, changes, cuts must reflect the interest of the country and the people.

Hon. Haruna Mshelia in his contribution stated that time was of the essence and urged for the speedy passage of the Bill to be proactive in dealing with the global effects of the COVID-19 pandemic.

On his part, Hon. Ibrahim Aliyu also supported the Bill stating that budget remains a projection that can be revised depending on prevailing realities. This, he stated, could not be overemphasised especially, considering the effect of the COVID-19 pandemic on the economy of the nation.

Hon. Sada Soli Jibia expressed concern on the excess of the benchmark, where monies are already being projected before the approval of the legislature. He called on the House to be more critical in supervising excess oil revenue funds, if not the illegality will continue in robbing Nigerians.

Hon. Taiwo Oluga also expressed worry about how after all necessary amendments the National Assembly must strictly oversight the funds to ensure public funds are not wasted, stating that Nigeria as a nation must improve her saving expenditure.

He called for a reduction of the recurrent expenditure in favour of capital expenditures and an improvement in the allocation to critical sectors such as education sectors as the post-COVID-19 educational sector will need more ICT.

After taking contributions on the revised budget from members, the presiding officers of the two chambers moved to consign the bill to second reading.

At the Senate, the revised budget proposal and the $5.513 billion external loan request to fund the budget were referred to Senate Committees on Finance and Foreign and Local Loans headed by Senators Adeola Olamilekan and Shehu Uba respectively.

Lawan gave the two committees up till Tuesday, June 2, to submit their report at plenary.

According to him, the Senate Committee on Finance will do further legislative work on the 2020 budget and MTEF/FSP proposals, while the Committee on Foreign and Local Loans will handle the $5.5.513 billion foreign loan request of the Executive.

In the House, the bill was referred to its committees on Appropriation and Finance and is to lay their report at plenary on Tuesday.

If the relevant committees succeed in laying their reports before the two chambers on Tuesday and are considered by the Committee of the Whole, the National Assembly might pass the revised 2020 bill on the same day and approve the $5.513 billion request by the federal government.