President Muhammadu Buhari’s $5.513 billion external loan request to finance the revised 2020 budget has been approved by the Senate on Tuesday, after the presentation and consideration of the report of the Senate Committee on Local and Foreign Debts, Senator Clifford Odia by the upper chamber.
President Muhammadu Buhari, who is in office for his second and last term claimed in his letter of request, that the $5.513 billion external loans are to enable the Federal Government to fund the 2020 revised budget.
Some parts of the external loan request, which the government claimed would enable it to execute its priority projects and for projects to support state governments in reviving their COVID-19 affected economy, was stood down by the Senate due to lack of clarity and details for the actual projects.
A lender for the Federal Government’s priority projects as approved by the Senate is the African Development Bank (AfDB) – $125million to strengthen the healthcare system and improve response to COVID-19 and $23 million for financing smallholder farmers to mitigate food security impact of the COVID-19 pandemic.
Other claims include $600million from the Islamic Development Bank to support response to challenges posed by COVID-19 and $500 million from the African Export-Import Bank to provide critical medical supplies to combat COVID-19.
The Senate passed the 2020-2022 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) of the Federal Government. Buhari in a letter last Thursday advised the upper chamber to approve the 2020-2022 MTEF/FSP.
However, the Senate approved the recommendation of the Senator Solomon Adeola-led Senate Committee on Finance that advised for the price of crude oil put at $25 per barrel by the Federal Government, be increased to $28 per barrel.
The upper chamber also approved that the proposed daily oil production benchmark of 1.9 million barrel per day be reduced to 1.8mbd while backing the proposed exchange rate, which was moved by the Federal Government from N306 to one dollar to N360 per dollar.
What that means is that the Senate has thrown its weight behind the devaluation of the naira while retaining the exchange rate of N360 to a US dollar, and 14.43 inflation growth rate and 4.42 GDP growth rate.
The Senate also retained the following assumptions: N5.09 trillion Federal Government’s revenue, N10.51 trillion, N4.95 trillion fiscal deficit, and N4.17 trillion new borrowings which includes foreign and domestic borrowing. N398.5 billion as statutory transfers, N2.68 trillion for debt service, N272.9 billion as a sinking fund, and N536.7 billion for Pension and gratuities.
The Senate also upheld other components of the proposal in the MTEF/FSP includingN10.51 trillion as total expenditure, N4.93 trillion as total recurrent, N2.83 trillion for personnel cost, and N2.23 trillion for capital expenditure.
Additionally, $500 – $750 million also being negotiated with the World Bank for State Fiscal Transparency and Sustainability Programme to provide financial support to the States was not approved.The Committee said that it would consider the proposals when it gets requisite details on what the loans would be used for from the Minister of Finance, Budget National Planning, Mrs Zainab Ahmed.