The Senate Saturday approved President Tinubu’s request to borrow $7.8billion and €100 million as part of the 2022 – 2024 borrowing plan of the Federal Government.
Senate approved the request after it considered and adopted the report of its committee on Local and Foreign Debt.
Tinubu had said that the Federal Executive Council under former President Muhammadu Buhari approved the loan facility on May 15, 2023 to finance infrastructure, health, education, agriculture, insecurity and other sectors.
He further explained that the foreign loan has become necessary to bridge the financial gap and return the economic activities of the country to normalcy.
The funds, he said, would be used to develop infrastructure, agriculture, health, education, water supply, security and employment as well as financial management reforms.
Similarly, the Red Chamber also okayed Tinubu’s request to securitise the Central Bank of Nigeria (CBN) N7.3trn Ways and Means advances to the Federal Government.
Tinubu had, in a letter read by the Senate President yesterday, said the securitisation aims to reduce debt service cost and extend the repayment period of the existing loans.
The Ways and Means provision allows the government to borrow from the Central Bank in the event that it requires short-term or emergency financing to support delayed government projected cash receipts of fiscal shortfalls.
The interest rate for the securitised Ways and Means advances has been reduced to 9% per annum, compared to the MPR of 0.3%.
According to Tinubu in the request, the savings arising from the much lower interest rate will have to reduce the deficit in the budget.
