President Bola Ahmed Tinubu’s request to borrow $7.8 billion and €100 million as part of the Federal Government’s 2022–2024 borrowing plan has been approved by the Senate.
The Senate’s resolutions came after it had considered and approved the report of its Committee on Foreign and Local Debt at a special plenary session on Saturday.
Tinubu had said that the loan facility to finance infrastructure, health, education, agriculture, insecurity, and other sectors was approved by former President Muhammadu Buhari-led Federal Executive Council, on May 15, 2023.
He went on to say that the country’s economic activity must resume normalcy in order to close the financial imbalance, which has made a foreign loan unavoidable.
According to him, the funds will go towards improving financial management changes as well as infrastructure, jobs, water supply, agriculture, health, and education.
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Similarly, the Red Chamber also okayed Tinubu’s request to securitise the Central Bank of Nigeria N7.3 trillion Ways and Means advances to the Federal Government.
The President, in a letter read by the Senate President, said the securitisation aims to reduce debt service costs and extend the repayment period of the existing loans.
The Ways and Means provision allows the government to borrow from the Central Bank if it requires short-term or emergency financing to support delayed government projected cash receipts of fiscal shortfalls.
The interest rate for the securitised Ways and Means advances has been reduced to 9% per annum, compared to the Monetary Policy Rate of 0.3%.
“The savings arising from the much lower interest rate will have to reduce the deficit in the budget,” Tinubu said.
