The Senate has given the nod to President Tinubu's request to borrow $7.8 billion and €100 million, marking a significant milestone in the Federal Government's 2022-2024 borrowing plan. The approval followed a meticulous consideration and adoption of the report by the Senate committee on Local and Foreign Debt during Saturday's plenary.
President Tinubu justified the borrowing, citing the approval of the loan facility by the Federal Executive Council under former President Muhammadu Buhari on May 15, 2023. The funds, he emphasized, are earmarked for vital sectors such as infrastructure, health, education, agriculture, and addressing insecurity, among others. Tinubu stressed that the foreign loan is crucial to bridging the financial gap and revitalizing the country's economic activities.
The approved funds are slated for deployment in developing critical areas, including infrastructure, agriculture, health, education, water supply, security, and employment, along with financial management reforms.
In a parallel decision, the Senate endorsed Tinubu's request to securitize the Central Bank of Nigeria's (CBN) N7.3 trillion Ways and Means advances to the Federal Government. Tinubu, through a letter read by the Senate President, clarified that this move aims to reduce debt service costs and extend the repayment period for existing loans.
The Ways and Means provision allows the government to borrow from the Central Bank for short-term or emergency financing to support fiscal shortfalls. Notably, the interest rate for the securitized Ways and Means advances has been substantially reduced to 9% per annum, a significant decrease from the Monetary Policy Rate (MPR) of 0.3%. Tinubu emphasized that the resulting savings from this lower interest rate would contribute to reducing the budget deficit.
As Nigeria navigates economic challenges, these approved measures are positioned as strategic tools to bolster essential sectors, stimulate economic activities, and ensure prudent financial management. The Senate's endorsement reflects a pivotal step in the government's pursuit of economic recovery and growth.
