UPDATED: Buhari writes National Assembly, seeks fresh $5.5 billion loan

President Muhammadu Buhari has written to the Senate and the House of Representatives, seeking approval for a fresh loan of $5.513 billion.

In a letter read by Speaker of the House of Representatives, Femi Gbajabiamila, at the plenary on Thursday, the president said the loan was to finance the 2020 budget deficit, financing of critical projects, and supporting some states of the federation.

A similar letter was read by Senate President Ahmad Lawan during the Senate plenary, on Thursday.

Breakdown:
For the proposed external loan to finance the revised budget, the president listed four lenders. They include:
-International Monetary Fund – $3,400,000,000
-World Bank – $1,500,000,000
-African Development Bank – $500,000,000
-Islamic Development Bank – $113,000,000

For the priority projects for the federal government, the lenders are:

-African Development Bank – $125 million “to strengthen the healthcare system to improve response to COVID-19” and $23 million for “financing smallholder farmers to mitigate food security impact of COVID-19.”

-Islamic Development Bank – $600 million for support of Nigeria’s response to challenges posed by COVID-19.
-African Export-Import Bank – $500 million for provision of critical Medical supplies to combat COVID-19.
-Export-Import Bank of Brazil – €995 million for Green imperative to enhance mechanisation of agriculture and agro-processing in Nigeria.

The lenders for projects to support various projects for state governments are the World Bank, African Export-Import Bank and Export-Import Bank of Brazil.

The president also presented a revised 2020 Appropriation Bill and the 2020-2022 Medium Term Expenditure Framework and Fiscal Strategy Paper to both chambers of the National Assembly.

He said it has become necessary to pass the 2020-2022 MTEF/FSP and amend the appropriation act 2020 in view of the sharp decline in crude oil prices and the cut in Nigeria’s crude oil production quota occasioned by the COVID-19 pandemic.

“In effect, the assumptions underlying the 2020 appropriation act are no longer sustainable. It is also imperative to adjust expected revenues disruptions and economic activities as well as international trade and transportation due to the measures implemented across the world to curtail the spread of COVID-19 pandemic.

“Furthermore, it is necessary to reallocate resources in the appropriation act 2020 to ensure implementation of required emergency measures and other actions necessary to mitigate socio-economic effects of COVID-19 pandemic,” part of the letter read.

The president’s loan request comes weeks after the National Assembly approved a loan of N850bn for the Federal Government and the Senate approved another $22.79bn loan which is currently pending before the House.

However, the N850 billion loan, according to the Debt Management Office, was not new but a conversion of a planned external loan to domestic borrowing.