Senate okays N850bn fresh loan request from Buhari

.Seeks new strategy to fight COVID-19, better coordination by govts, private sector

.PDP expresses concerns over loan request, demands accountability

.Approved N850bn loan request not new loan, says DMO

Within five minutes of consideration, the Senate on Tuesday unanimously approved a N850 billion fresh loan requested by President Muhammadu Buhari.

The approval for the loan which is to be sourced from the domestic capital market was given   after the request was read to Senators by the President of the Senate, Ahmad Lawan, at plenary.

To ensure approval of the request, the Senate suspended Order One of its standing rule which stipulates that such request be referred to the relevant committee for thorough parliamentary deliberation.

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President Buhari had in a letter dated 24th March, 2020 requested for resolution of the National Assembly to raise N850bn in new external borrowing in the 2020 Appropriation Act in Naira from the Domestic Capital Market.

The President reminded the Senate that the 2020 Appropriation Act  provided for  N1,594,986,007,544.00 of new borrowing comprising of  N744,986,007,544 of new domestic borrowing and N850bn of new external borrowing.

These two set of borrowing, he said, were meant to part – finance the 2020 budget deficit.

Buhari, in the letter, stated that “to ensure that there are adequate funds to finance critical projects and programmes in the 2020 budget, I hereby seek the Senate’s approval by resolution to raise the N850 billion of new external borrowing in naira from the domestic capital market instead of from the international capital market”.

Giving reasons for preference for borrowing from domestic market, the president said although “external borrowing from the international capital market increases Nigeria’s external reserves, provides access to lower costs as well as avoids crowding out private sector borrowers who also wish to access the domestic capital market, recent developments in the global economic environment as a result of the Coronavirus pandemic and the decline in international oil prices have made it less attractive to borrow from the international capital markets at this time”.

According to him, “the conditions in the domestic capital market are favourable in terms of availability of funds and relatively low interest rates. This cause of action is deemed prudent given our current realities.”

Buhari lamented the inability of the Federal Government to seek the loan from the international capital market, which according to him, would have been more beneficial.

He drew the attention of the Senate to provisions in the 2020 National Budget which empowered government to raise the loan to fund the capital budget.

“The Senate may wish to recall that the 2020 Appropriation Act provided for N1,594,986,700,544 of new domestic borrowing and N850 billion of new external borrowing.

However, he said, it remains the intention of the government “to access the international capital market when conditions improve to refinance this N850 billion of new borrowing and epitomise the benefits inherent in external borrowing”.

Buhari informed the Senate that he had “directed the Minister of Finance, Budget and National Planning to make herself available to provide any additional information or clarification which you may require.”

After the approval by the Senate, Lawan directed the Senate Committee on Finance to liaise with the Minister for Budget and National Planning to get further details of the loan.

However, the Peoples Democratic Party (PDP) has expressed concerns over what it described as  hasty approval of yet another loan of N850 billion for President Muhammadu Buhari’s administration by  Senate, despite allegations of financial recklessness and lack of accountability that have dogged the administration.

The party was  further concerned that the Buhari-led administration had failed to articulate tangible wealth creation programmes to buoy the economy, despite the huge natural and human resources at its disposal, but relishes only in accumulating loans, without precise repayment plans, thereby pawning the economy as well as the future of the nation.

In a statement on Tuesday night by its publicist, Kola Ologbondiyan, the party said Nigerians are alarmed that the Buhari administration’s over dependence on loans is wrecking our economy while amassing huge problems for our future generation.

It added that it is even more worrisome that the loans are not transparently managed as most of them are being trailed by allegations of mismanagement and embezzlement.

The PDP held that instead of constantly resorting to borrowing, the Federal Government should articulate innovative ways to create wealth and plug wastes.

“What is expected at a time like this is for the Buhari Presidency to immediately cut on luxury, slash the number of Presidential appointees, cut down huge allowances that gulp billions of naira and maintain a lean budget that will center on health, research and growth of our economy among other critical needs”, it said.

The PDP charged the Senate Presiding officers to note that in approving this loan, the nation holds them responsible to ensure strict oversight monitoring of the handling of the money.

It said “this is especially as it is being sourced from the capital market, which hosts investments by private individuals and firms.

“The Senate must ensure judicious use of the funds as well as prompt repayment. This is because our nation cannot afford any default, as such is capable of crippling the capital market and worsening the economic hardship already being faced by Nigerians”.

The PDP therefore urged all stakeholders, particularly fiscal transparency groups, the Nigeria Corporate World and management of the capital market to protect Nigerians by closely monitoring the performance of the loan to guarantee effective management and prompt repayment.

Meanwhile, the Debt Management Office (DMO) has said that the N850 billion loan approved on Tuesday by the Senate is not a new borrowing, but a “conversion of external to domestic borrowing”.

Giving more details of the loan, the Director-General of the DMO, Patience Oniha, said this was not a new request or incremental borrowing, rather “an amendment of the source of borrowing from external to domestic.”

“The 2020 Appropriation Act approved a total of N1,594.99 billion (about N1.595 trillion) as new borrowing to part-finance the deficit in the Budget (put at about N2.175 trillion),” she said.

The total debt component in the approved 2020 Budget consisted N794.99 billion from domestic borrowing sources and N850 billion from external borrowing sources.

With the ravaging impact of the coronavirus pandemic on the global economy, particularly the international capital market, Oniha said the Federal Government decided to reappraise its borrowing plans for the year.

Part of the outcome of the reappraisal, she said, was to decide to raise the N850 billion earlier approved as external borrowing, from domestic sources.

“This conversion from External to Domestic borrowing is to ensure that the implementation of the 2020 Appropriation Act is not jeopardized by lack of funds.

“Thus, the N850 billion is not new or incremental borrowing, rather it is an amendment of the source of borrowing from External to Domestic sources,” the DMO boss said.

She said with the change, the new figure for the total domestic borrowing under the 2020 Appropriation Act is now about N1.595 trillion, which remains the same as the total new borrowing earlier approved in the same Act.

In a another development, to make concerted efforts at containing the coronavirus pandemic effective, the Senate has advocated better coordination amongst stakeholders across the three tiers of government.

The upper chamber at plenary on Tuesday charged the executive arm of government to set up a national technical committee on COVID-19 made of relevant scientists and health professionals, both at home and abroad.

The lawmakers as well want government through the committee to re – strategise in the fight against Coronavirus pandemic and distribution of palliatives to Nigerians.

The red chamber resolved that the committee should be charged with the responsibility of developing national strategic response to the pandemic including the detailed epidemiology of the disease in Nigeria, the development or production of rapid testing kits, effective therapy and prevention mechanism, etc.

These resolutions were consequent upon a motion, “COVID-19 pandemic: Reviewing the national responses to the challenges and the way forward,” jointly sponsored by the Majority Leader, Yahaya Abdullahi (Kebbi North) and the Minority Leader, Enyinnaya Abaribe (Abia South) and co-sponsored by five other lawmakers during Tuesday’s plenary.

The Senate further urged the executive to articulate a coherent and coordinated exit strategy from the lockdown through a phased opening of the economic and social spheres of the nation without compromising the safety of the citizens and ensuring that there is no increase in the rate of the infection.

It also called on the Presidential Task Force (PTF) and state governors to embark on massive mobilisation, education and enlightenment of Nigerians on the reality of the pandemic and means of protecting themselves, their families and communities from contacting and spreading the virus.

The Senate further urged the executive to fast-track the submission of the revised Medium Term Expenditure Framework (MTEF), Fiscal Strategy Paper (FSP) and the 2020 budget to the National Assembly for consideration and passage.

It specifically advised the Presidency to use “this grim period to change the trajectory and structure of the Nigerian economy by appropriating at least 10 percent of the growth domestic product (GDP) as stimulus package for investment” into the key sectors of the economy.

The sectors as stated are those of the health and education infrastructure, agriculture, solid minerals, renewable energy, petroleum industry, infrastructure and public works like roads, railways, harbours, waterways, etc and investment on science and technology.

Leading debate on the motion, Abdullahi was disturbed that “despite all actions by the PTF and the Nigeria Centre for Disease Control (NCDC), the cases of COVID-19 has continued to rise in Nigeria with community transmission now happening and becoming a major threat to people’s lives.”

The Senate Leader was also worried that “from one state and one case on Thursday, 27th February, as at Sunday, 26th April, 2020, (eight weeks later), 32 states plus FCT now have cases of COVID-19 with total cases of 1,273; 239 discharged and 40 deaths representing three percent case fatality rate.”

He listed challenges with the management of the situation in Nigeria to include shortage of extraction and testing kits, non-uniform treatment, limited resources to support the states at point of care, limited information to guide distribution of medical products, low stocks of essential supplies, poor coordination of response between the federal and state governments and poor utilisation of available human and manufacturing capacities.

Abdullahi also lamented that “the massive disruption of the world economy caused by the pandemic has its direct effect on Nigeria in the form of the collapse of crude oil price and subsequent drop in the revenue sources like value added tax, taxes, custom duties due to local and international lockdowns.”

He noted the inconvenience that the lockdown order by the federal and many state governments have put on Nigerians and commended them for their cooperation and patience in view of the limitations of the various palliatives provided by the government, private sector and individuals during the restrictions.

Contributing, Abaribe said the Federal Government needs to look into the solution to the problem because “Nigerians have been so patient with us even though the pandemic case came from outside the country.”

In his own, the deputy senate president, Ovie Omo-Agege raised concerns over the agitation by Nigerians for the cancellation of the lockdown despite its effects on the economy, saying staying alive safely should be the major priority.

Chairman of the Senate Committee on Primary Health and Communicable Diseases, Chukwuka Utazi, stressed the need to strengthen the NCDC, noting that it has “shown capacity that it can do better.”