Osinbajo seeks reps approval to borrow $500m for 2016 budget

Acting President Yemi Osinbajo has asked the house of representatives for approval to borrow $500 million out of the $1 billion Eurobond from the International Capital Market (ICM).

Osinbajo said the $500 million would be used to fund the 2016 budget deficit.

In a letter addressed to Yakubu Dogara, the speaker, and read on the floor of the house on Wednesday, the acting president said following the recent over subscription of the $1 billion Eurobond issuance, it would be best to take advantage to issue a debt Instrument of $500 million to implement the 2016 budget that is ongoing.

“The Rt. Honourable speaker may also wish to note that whilst the approved domestic borrowing has been fully incurred, the N635.877 billion external borrowing has not been fully accused,” he said.

“The external borrowings incurred to date consist of USD 600 million from the African Development Bank and USD 1 billion Eurobond from the International Capital Market (ICM) only.

“Thus, based on the 2016 appropriation and applying the average exchange rate, there is headroom to access further international funds.

“Following the high over subscription of the recent USD 1 billion Eurobond issuance, we wish to take advantage of favourable market conditions to issuance of Eurobond debt instrument of USD 500 million to fund the implementation of the 2016 budget, which is still ongoing.

“The Rt. honourable speaker may wish to note in line with the requirement of securities issuances in the ICM, a specific resolution of the national assembly, as a firm confirmation of the approval of the legislature for the federal government of Nigeria to borrow the USD 500 million through the issuance of a Eurobond debt instrument in the ICC is required.”

Osinbajo explained that the $500 million would be used as “funding sources” to finance the deficit, including capital expenditure projects as specified in the 2016 budget.

He said the Debt Management Office (DMO) and and the government’s appointed transaction parties were working to ensure the best terms and conditions for the country.

“Accordingly, the Rt. honourable speaker is requested to kindly approve by resolution of the national assembly the issuance of USD 500 million Eurobond in the international capital market for the funding of the budget,” Osinbajo said.