The federal government has asked the National Assembly to approve a request to borrow $5.5 billion. The request was made by President Muhammadu Buhari in a letter to the Senate titled, “Request for the approval of external loan for: Implementation of the external borrowing approved in the 2017 Appropriation Act and 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.”
The letter read: “The Senate may wish to refer to the 2017 Appropriation Act, which has a deficit of N2,356 trillion and a provision for new borrowings of N2.321 trillion, respectively.”
The budget made provision for Domestic Borrowing of N1.254 trillion and external borrowing of N1.067 trillion (about $3.5 billion.)
Buhari said the Senate may wish to note that in order to implement the External Borrowing approved by the National Assembly in the 2017 Appropriation Act, the federal government issued a $300 million Diaspora Bond in the international capital market, ICM, in June 2017. “The balance of the 2017 external borrowing in the sum of USD3 billion is planned to be partially sourced from issuance in ICM of USD2.5 billion through Eurobonds or combination of Eurobonds and Diaspora Bonds while USD700 million is proposed to be raised from multilateral sources,” the letter stated.
The President stated that the proceeds of Eurobonds (and Diaspora bonds) would be used fund capital projects, including the Mambilla Hydropower Project, Construction of a Second Runway at the Nnamdi Azikiwe international Airport, counterpart funding for Rail projects and the construction of the Bodo-Bonny Road, with a Bridge across the Opobo Channel.
The President allayed fears that the proposed sourcing of $3.0 billion from external sources to re-finance maturing Domestic Debt will lead to an increase in the public debt portfolio. Rather, he said the substitution of domestic debt with relatively cheaper and long-term external debt will lead to a significant decrease in debt service cost. “This proposed re-financing of Domestic Debt through External Debt will also achieve more stability in the Debt Stock while also creating more borrowing space in the domestic market for the private sector,” said the letter.
Buhari concluded the letter thus: “While looking forward to the timely approval of the National Assembly to enable Nigeria take advantage of these opportunities for funding, please accept, Distinguished Senate President, the assurances of my highest esteem.”