Nigerian Senate rejects Buhari’s plan to borrow $30 billion abroad

LAGOS (Capital Markets in Africa) – Nigeria’s Senate rejected President Muhammadu Buhari’s plan for foreign borrowing of $30 billion through 2018 on technical grounds, without debating it.

In a letter presented to the Senate last week, President Buhari said he planned to use $11.3 billion of the funds for government projects and programs and $10.7 billion for “special national infrastructure projects.” As a result, Buhari asked the Senate to immediately approve $575 million that the World Bank pledged in loans to help reverse a polio outbreak in northeastern Nigeria and support reconstruction in the region, where Boko Haram, an Islamist militant group, has fought the government for seven years.

The lawmakers in a session led by Senate President Bukola Saraki voted to reject the proposal as most senators shouted again “Nay”.

The Senate turned down the President’s borrowing plan on “technical grounds,” Senate Majority Leader, Senator Ali Ndume told reporters. He reiterated that while Buhari’s letter referred to an attachment, there was none and “these are the kinds of lapses we are trying to look at” before considering the request again, he said.

The Nigerian government plans to boost its spending by 12.6 percent to a record 6.87 trillion naira ($22 billion) in 2017, according to the medium-term expenditure plan, to help stimulate business and revive an economy that the International Monetary Fund forecast will contract by 1.7 percent this year. The government plans to borrow more abroad than locally to benefit from lower debt costs while sparing domestic credit for the private sector, Budget and National Planning Minister Udo Udoma said last month.

The borrowing plan will run for three years with government targeting to raise about $10 billion every year, the Finance Ministry said in an e-mailed statement, citing the director-general of the Debt Management Office, Abraham Nwankwo. Nigeria’s debt agency plans to raise as much as $4.5 billion in international markets through 2018, starting with $1 billion of Eurobonds in 2016. Also, the government planned to take loans from the African Development Bank, World Bank, Export-Import Bank of China, and Japan International Cooperation Agency.