The President of the Senate Ahmad Lawan has listed the approval of $28 billion (N10.08 trillion) external debt for Federal Government as one of the achievements of the senate in the past 1 year.
He stated this while delivering a speech to his colleagues, to mark the beginning of senate’s second legislative year which started on Thursday.
He said, “In order to support and enable the government to raise the necessary funds for national development, there were requests for approval to borrow, both from the domestic and foreign sources.
“We have approved foreign loans of about $28bn in the last one year.”
“The task ahead of us is to ensure tracking, monitoring and supervision of how the loans are applied.”
Lawan said the need for foreign bowing arose from the low revenue of the government due to decline in oil prices.
“The low revenues from crude exports also means that there is need to explore other sources of funding the Budget, hence the resort to foreign borrowing from bilateral and multilateral sources.”
It is deeply concerning for many Nigerians that the Nigerian government, with the approval of the Senate and House of Representatives took to extensive borrowing as opposed to cutting frivolous expenses which will save the nation a lot of money as well as limit the indebtedness of the country.
In the recently passed 2020 revised budget, which was jerked up to N10.805 trillion;
- N27 billion was budgeted for renovation of National Assembly Complex, while the appropriation for the National Assembly was retained at N128 billion.
- N2.951 trillion (27.31%) was allotted for debt servicing, N4.938 trillion (45.7%) was allotted to recurrent (non-debt) expenditure.
This implies that Debt servicing and recurrent expenses will gulp over 73% of the budget, which will be mainly financed by loans. The budget deficit was estimated at N4.17 trillion.
The 2020 Appropriation Act (Amendment) Bill is predicated on an oil production of 1.8 million barrels per day and a benchmark oil price of $28 dollar per barrel.
This projected deficit is bound to be more than the amount estimated. Indication shows that between 2015 to the third quarter of 2019, Nigeria has only been able to generate an average of 66% projected total revenue.
In addition, the oil production output used for the budget is far bigger than Nigeria’s Quota according to the agreement by OPEC+.
According to the production cut deal, Nigeria is required to produce 1.412 mb/d till June 30, 2020, and increase production to 1.495 mb/d between Jul 1 – Dec 2020. From January 2021 to the end of April 2022, the country will increase production to 1.579 mb/d.
However the June production has now been extended till the end of July.
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Recent external loans approved for the FG:
- $5.51 billion loan for funding of revised budget deficit. The house has approved the borrowing on Wednesday.
- $288.5 million from African Development Bank (AfDB) to help Nigeria tackle the COVID-19 pandemic and mitigate its impact on people and businesses on 7 June.
- $3.4 billion from International Monetary Fund (IMF) to aid Nigeria in alleviating the economic impact of Covid-19 on 28 May.