The Senate has approved President Bola Tinubu’s proposal to take a loan $7.8 billion and €100 million as part of the Federal Government’s borrowing strategy for 2022–2024.
During Saturday’s plenary session, the Senate discussed and endorsed the report of the committee on local and foreign debt.
According to Tinubu, the Federal Executive Council of former President Muhammadu Buhari approved the credit facility on May 15, 2023, to support various sectors of the economy, including agriculture, security, infrastructure, health, and education.
The president went on to say that the foreign loan was necessary to bridge the financial gap and restore normalcy to the country’s economic activities and that it would be used to develop infrastructure, agriculture, health, education, water supply, security, and employment, as well as financial management reforms.
In a similar vein, the Red Chamber approved Tinubu’s proposal to securitize the N7.3 trillion in Ways and Means loans made to the Federal Government by the Central Bank of Nigeria.
Tinubu stated in a letter read by the Senate President Wednesday that the securitization intends to cut debt servicing expenses while also extending the payback duration of current debts.
The Ways and Means provision authorises the government to borrow from the Central Bank in the event that it requires short-term or emergency funding to sustain delayed government forecast cash receipts of fiscal deficits.
The interest rate for securitised Ways and Means advances has been cut to 9% per annum, compared to 0.3% for the MPR.
“The savings arising from the much lower interest rate will have to reduce the deficit in the budget,” he stated.
