The fate of the 2017 budget is still hanging in the balance even after the federal government has moved the implementation of its capital projects to 2018. Now, availability of funds to back the projects is doubtful with President Muhammadu Buhari asking the Senate to approve his bid for an external loan of $5.5 billion to enable the government finance the 2017 budget.
The request is contained in a letter to the Senate President, Bukola Saraki read on the floor of the Senate on Tuesday.
The foir-page letter is entitled ”Request for the approval of External Loans for: 1. Implementation of the External Borrowing Approved in the 2017 Appropriation Act: 11 External Borrowing to Re- finance maturing domestic debts through the issuance of USD3.00 Billion Eurobond in the International Capital Market or through a loan syndication.”
According to the letter, while $3 billion would be sourced through Euro bond, the remaining $2.5 would come from other sources in the international capital market.
President Buhari however allayed fears of Nigerians on the country's debt profile, saying that the proposed external borrowing would not lead to an increase in the public debt portfolio against the backdrop that the debt already exists in the form of high interest short term Domestic Debt.
According to him, the substitution of Domestic Debt with relatively cheaper and long-term external debt will lead to a significant decrease in Debt Service Cost, just as he said that government’s moves in re-financing of Domestic Debt through External Debt would also achieve more stability in the Debt Stock, adding that it would create more borrowing space in the domestic market for the private sector.
PIX: President Muhammadu Buhari