Senate approves Pres. Tinubu’s request to borrow $7.8bn, €100m
The Senate has given its approval to President Bola Tinubu‘s request to secure a loan totaling $7.8 billion and €100 million, as part of the Federal Government’s borrowing plan for the years 2022 to 2024.
The green light for this request came following the Senate’s thorough consideration and adoption of the report presented by its committee on Local and Foreign Debt during the plenary session held on Saturday.
Tinubu justified the need for this foreign loan by highlighting that it was originally approved by the Federal Executive Council under the administration of former President Muhammadu Buhari on May 15, 2023.
The funds are intended to address crucial sectors such as health, education, infrastructure, agriculture, and security, among others.
The president emphasized the necessity of the loan in closing the financial gap and revitalizing the country’s economic activities.
The allocated funds are earmarked for the development of various sectors, including infrastructure, agriculture, health, education, water supply, security, and employment, as well as financial management reforms.
In addition to the loan approval, the Senate also greenlit Tinubu’s request to securitize the Central Bank of Nigeria’s N7.3 trillion Ways and Means advances to the Federal Government.
In a letter read by the Senate President, Tinubu clarified that the securitization initiative is aimed at reducing debt service costs and extending the repayment period for existing loans.
The Ways and Means provision enables the government to borrow from the Central Bank in instances where short-term or emergency financing is required to address delayed government cash receipts or fiscal shortfalls.
Notably, the interest rate for the securitized Ways and Means advances has been decreased to 9% per annum, a significant reduction compared to the Monetary Policy Rate (MPR) of 0.3%. Tinubu highlighted that the resulting savings from the lower interest rate will contribute to reducing the budget deficit.