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Senate okays FG’s $1.5bn, €995m external loans request

By News Desk

Amidst concerns raised by stakeholders on Nigeria’s debt, Lawmakers at the National Assembly have approved $1.5 billion and €995 million external loans for the Federal Government.

The lawmakers’ action followed consideration of the report of its Committee on Local and Foreign Debts on the external borrowing plan of the Federal Government at plenary.

Chairman of the Committee, Senator Clifford Ordia, presented the report, adding that the recommendation from his panel followed thorough considerations and consultations by the committee members.

According to him, the €995m loan is meant for agricultural mechanisation across the 774 LGAs while the $1.5 billion loans will be used to fund critical infrastructure in the aftermath of the COVID-19 pandemic across the 36 states and the federal capital territory.

He added that the loans were to be facilitated by the International Monetary Fund (IMF), World Bank, African Development Bank Group (AFDB), and Export/Import Bank of Brazil (BNDES), and Deutsche Bank of Germany.

Senator Ordia explained $1.5billion will be sourced from the World Bank to finance projects of state governments facing fiscal challenges arising from the COVID-19 pandemic.

The projects, according to Ordia, are States Fiscal Transparency, Accountability and Sustainability Programme to provide fiscal support to states (SFTAS) and COVID-19 action recovery and economic stimulus programme to support State-Level efforts to protect livelihoods, ensure food security and stimulate economic activity (N-CARES).

He said that €995 million to be sourced from the Export-Import Bank of Brazil is to finance the Federal Government’s Green Imperative Project (GIP) to enhance mechanisation of agriculture and agro-process in Nigeria to improve food security, saying the borrowings were largely concessional loans with low-interest rates and a reasonable moratorium and payback period.

He said that $750million out of the $1.5billion to be sourced from WB has a grace period of five years, 25 years tenor, and an interest rate of 2.45 per cent per annum while the balance of $750 million also has a grace period of five years, 25 years tenor and an interest rate of 2.5 per cent per annum.

Ordia explained that the loans are part of the external borrowing plan of the federal government. The request was however approved by Senators when it was put to a voice vote by Senate President Ahmad Lawan.

It would be recalled that President Muhammadu Buhari had, in May 2020, asked the Senate to approve the loans to finance various priority projects of the administration as well as support the State Governments facing fiscal challenges.

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