OrderPaperToday- The Senate on Tuesday approved the sum of $5.5 billion external loan as provided for in the 2017 budget.
Recall that on October 10, President Muhammadu Buhari wrote to the Senate seeking approval of a $3 billion Euro bond in the international capital market and another $2.5 billion for financing the 2017 appropriation act.
The letter indicated that there was an existing deficit of N2.356 trillion in the 2017 appropriation act.
According to Buhari, the infrastructural projects to be funded include Mambilla hydro- power project, construction of the second runway of the Nnamdi Azikwe International Airport, counterpart funding of rail project as and construction of Bonny road with a bridge across Opobo channel.
Presenting the report of the Committee on Local and Foreign Debts for consideration, the Chairman, Senator Shehu Sani (APC, Kaduna) noted that the terms and conditions of the loan are favourable and do not pose any compromise to the integrity, independence and interest of Nigeria and its citizens.
Speaking on the significance of the loan, Sani stated that the projects are for rapid economic and social development of Nigeria.
The projects when completed will also create job through its chain of downstream economic activities, according to him.
He said: “The construction of the second run way of the Nnamdi Azikwe international airport will enhance the safety of the air passengers, increase the use of airports by international airlines thus increase the revenue base of the government.
“The rail projects when completed will reduce the use of roads, its attendant congestion and thus minimise the cost of road maintenance,
“The Mambilla hydro power project which has long been abandoned when completed will add substantially to the national grids thus improve of power output of the country. The projects will improve the federal government’s revenue.”
The Senator stressed that the $3 billion for the financing of the nation’s domestic debts “will not lead to an increase in the public debt portfolio however would reduce the cause of the debt.
“The proposed refinancing of the nation’s domestic debt stock with this relatively cheaper, with the financing of the external loan will create a significant decrease in the course of financing the course of the nation’s debt stock while creating more borrowing space in the domestic market for the private sector to benefit from.”
He further observed that substituting high interest, short term domestic debt with less expensive long term extra debt will reduce the current debt servicing ratio.