Lawmakers in the Nigerian Senate on Tuesday approved the President Muhammadu Buhari’s request to borrow $5.5 billion foreign loan.
The senators, in approving the loan request, however called for caution in the manner the Federal Government rushes to secure external loan.
A look at the breakdown of the $5.5 billion loan shows that $2.5billion is to finance the 2017 Appropriation Act, while $3billion is to refinance domestic debts.
The final nod of the Red Chamber followed consideration of the report of the Senate Committee on Local and Foreign Debts, under Shehu Sani on Tuesday.
Mr Sani, an APC senator from Kaduna, said the capital projects in the 2017 budget, which the loan would be used to finance, are essential for the rapid development of the country.
According to him, the projects will not only improve economic development but also provide direct and indirect jobs for Nigerians.
Some of the capital projects include: construction of a second runway at the Nnamdi Azikiwe International Airport Abuja, Mambilla Hydropower Project, counterpart funding for rail projects and the construction of the Bode-Bonny Road, with a bridge across the Opobo Channel.
Mr Buhari had on October 10, asked the National Assembly to approve two external loans worth $5.5 billion.
Defending the loan request, Finance Minister Kemi Adeosun, had earlier told the committee that the terms and conditions of the loan would only be known at the point of issuance.
The committee observed that the construction of the second runway in the Nnamdi Azikiwe International Airport would enhance the safety of air passengers, increase the use of the airport by international airlines and increase the revenue base of government.
It also observed that the Mambila Hydro Power Project, which had long been abandoned, when completed, would add substantially to the national grid and improve power output of the country.
“The terms and conditions of the loan are favourable and do not pose any compromise to the integrity, independence and interest of Nigeria and its citizens. The projects will improve Federal Government revenue.
“The USD3 billion for refinancing of the nation’s domestic debts will not lead to an increase in the public debt portfolio. However, it will reduce the cost of the debts.
“The refinancing on external loan will create a significant decrease in the cost of financing the nation’s debt stock while creating more borrowing space in the domestic market for the private sector to benefit from,” the report stated.
But in his contribution, Yusuf Abubakar Yusuf, called for caution on the borrowing of $3 billion to refinance domestic debt.
Mr Yusuf, from Taraba state, said this could have adverse effect on the economy if the national currency depreciates.
“We must be very careful because this is dependent on what happens in our foreign reserves. If our foreign exchange rate goes to N500/USD1, we are going to have a very serious problem on generating enough foreign exchange to pay the foreign debts,” he said.
Deputy Senate President, Ike Ekweremadu, who presided over the session, urged the Debt Management Office to ensure that the nation’s debt profile is within acceptable limits.
He assured that the Senate would continue to partner with the Federal Government in matters that affect the ordinary people of Nigeria.
“Since this is tied to the implementation of the 2017 budget, I believe that that had informed the support that this request is now generating.
“We need to urge the Debt Management Office to ensure that our debt profile is monitored so that we will always ensure that it is within the acceptable limit,” Mr Ekweremadu said.