President Muhammadu Buhari has written to the Senate requesting approval of External Loans for implementation of the external borrowing approved in the 2017 Appropriation Act and external borrowing to re-finance maturing domestic debt.
According to the President’s letter, the total cost of External Borrowing is $5, 500, 000,000,000 consisting of:
- Issuance of $2, 5,000,000,000 in the International Capital Market(ICM) through eurobonds or a combination of eurobonds and diaspora bonds, for the financing of the Federal Government’s 2017 Appropriation Act and Capital Expenditure projects in the Act; and
- Issuance of Eurobond in the ICM and/or Loan Syndication by banks in the sum of $3,000,000,000 for re-financing of maturing domestic debt obligation of the Federal Government.
In addition, the President used the medium to explain that the proceeds from the proposed issuance of Eurobonds (and Diaspora Bonds) in the ICM would provide funding for the capital projects in the budget which includes the Mambila Hydropower Project, ronstruction of a second runway at the Nnamdi Azikiwe International Airport, counterpart funding for Rail projects and the construction of the Bodo-Bonny road, with a bridge across the Opobo channel.
The President also stated in his letter that the Federal Government seeks to substitute maturing domestic debt with less expensive long term external debt. He mentioned that the proposed sourcing will not lead to an increase in the public debt portfolio because the debt already exists, albeit in the form of high interest short term domestic debt; and will achieve more stability in the debt stock while creating more borrowing space in the domestic market for the private sector.
The President therefore urged Members of the Senate to immediately approve the sum of $5, 500,000,000,000 to enable Nigeria take advantage of these opportunities for funding.
Click here to view the President’s letter to the Senate
