The Senate on Thursday granted President Bola Tinubu permission to obtain a $2.209 billion external loan.
The loan was approved after considering the report of the Senate Committee on Local and Foreign Debts, presented by its Chairman, Aliyu Wamakko, during plenary.
The loan, equivalent to N1.767 trillion, would be part of the funds used to finance the N28.7 trillion 2024 budget as incorporated in the Appropriation Act.
It will be sourced from the country’s Eurobonds in international capital markets and gains from its financial laws.
A Eurobond is a debt instrument denominated in a currency other than the home currency of the country or market in which it is issued. Eurobonds are important because they help countries or organisations raise capital while allowing them to issue them in another currency.
President Tinubu requested the approval on Tuesday in accordance with the provisions of Sections 21 (1) and 27 (1) of the Debt Management Office and the approval of the Federal Executive Council.
While presenting the report, Mr Wamakko (APC, Sokoto North) said if the external borrowing request is approved, it will strengthen the nation’s foreign reserve.
He explained that the loan will be sourced through Eurobonds in the International Capital Market, the Issuance of debut sovereign Sukuk in the International Capital Market, with a Guarantee from the Islamic Corporation for Insurance of Investment and Export Credit (ICIEC), and Bridge Finance/Syndicated Loans.
The senator said the loan will be at the official exchange rate of $1.00/N1,640 for implementing capital projects as contained in the 2024 budget.
Mr Wamakko said the federal government needed the funds to complete ongoing implementation projects and programmes in the budget.
Aside from the completion of ongoing projects, the senator said the Issuance of the bonds will contribute to the implementation of the Debt Management Strategy, which seeks to reduce the cost of borrowing, lengthen the maturity of the public debt stock, free up space in the domestic market for other borrowers and will help increase Nigeria’s external reserves.
He said members of the National Assembly will collaborate with the Federal Ministry of Finance to ensure that the fund is appropriately utilised when it is finally sourced.
He, therefore, recommended the approval of the Issuance of the bond to enable the federal government to settle outstanding claims and liabilities.
The request was not debated by senators before the Deputy Senate President, Barau Jibrin, who presided over the plenary, approved it.
Mr Jibrin explained that the president’s request is straightforward and that there is no need for an extensive debate.
He also said the external borrowing request was in the country’s best interest.
Mr Jibrin then appreciated the committee members for the recommendations.
