Buhari asks national assembly to approve $6bn loan request

President Muhammadu Buhari has asked the national assembly to approve a loan request of $6 billion.

The request is a component of an external borrowing plan contained in the 2021 budget.

The president’s request was read by Senate President Ahmad Lawan on the floor of the upper legislative chamber on Tuesday.

Buhari said the sum — approximately $6.183 billion — will be raised from multilateral and bilateral tenders as well as the international capital market.

“I wish to bring to the attention of the president of the senate that the plan is to raise the sum of USD 6.183 billion from a combination of sources, namely multilateral and bilateral tenders as well as from the International Capital Market (ICM) through the issuance of Eurobonds. From recent trends in the ICM it is now possible for Nigeria to raise funds in the ICM and this explains why we are proposing that the New External Borrowing in the 2021 Appropriation Act should include issuing Eurobonds in the ICM. We estimate (that Nigeria may be able to raise USD 3 billion or more but not more than USD 6.183 billion) the amount provided in the 2021 Appropriation Act in a combination of tenors between 5 and 30 years, the outcome would, however, be determined when Nigeria approaches the market,” he said.

The president said the interest rates at the international capital market are low compared to the year 2020.

“The president of the senate may further wish to note that not only is the ICM now open to issuers like Nigeria and interest rates lower than the levels in 2020, given the recent monetary policy stance, as well as, rising levels of inflation, the level of liquidity in the domestic market has decreased while domestic interest rates are beginning to rise,” he said.

“Therefore, accessing the ICM will be relatively cheaper thereby moderating debt service cost, and it will also contribute to the level of external reserves.”

Buhari also asked the national assembly to approve donor funded projects 2018-2020 external borrowing plan.

The projects are to be funded by the World Bank, the Africa Development Bank, and the Islamic Development Bank.