The Senate, yesterday, approved the sum of $16 billion, €1 billion and a grant of $125 million as foreign loans for President Muhammadu Buhari to fund his administration’s legacy projects.
The red chamber specifically approved the issuance of €500 million from the Bank of Industries and €750 million Eurobond in the International Capital Market. It asked the President to forward the terms and conditions of the loans from the funding agencies to the National Assembly.
The implication of Nigeria’s ever increasing debt service, however, is that the government is expending nearly all its revenue in servicing recurrent expenditure and debts, consequently causing the Federal Government to have recourse to foreign loans, and thereby further increasing the nation’s external debt profile.
The Federal Government had in July 2021, disclosed that it spent N1.8 trillion on debt servicing in the first five months of the year, representing about 98 per cent of the total revenue generated in the same period.
A total of N4.86 trillion was spent by the Federal Government between January and May 2021. While recurrent expenditure in the review period stood at N3.67 trillion, debt service was N1.8 trillion.
The Senate, yesterday gave approval following the consideration of the report of its Committee on Local and Foreign Debts, chaired by Senator Clifford Ordia.
While presenting the report, Ordia said the projects, which funds are requested for in the 2018-2020 borrowing plan, are ongoing.
“The projects will stimulate a rebirth of commercial and engineering activities and the consequent tax revenues payable to government as a result of these productive activities will increase.
“It will be recalled that the Senate at plenary in July 2021 approved financing for projects as recommended by the Committee. Subsequently, on September 15, 2021, the Senate President read another communication from the President containing an addendum to the 2018-2020 External Borrowing (Rolling) Plan in the sum of $4,054,476,863, €710,000,000 and Grant Component of $125,000,000 for various projects and same was also referred to the committee for further legislative action.