BY BAYO AMODU, SOLOMON AYADO, AHURAKA ISAH and MBAKAAN KWEN, Abuja
The Senate yesterday finally approved a $5.5billion loan request sent to it by President Muhammadu Buhari to allow the federal government to secure two external borrowings.
Against the backdrop of the upsurge in the country’s debt profile, which stood at N19.6 trillion as at June 30, 2017, some Nigerians, both individuals and groups, had kicked against request to borrow another loan, saying it was a way of mortgaging the future of Nigerians.
The governing All Progressives Congress (APC) and the Peoples Democratic Party, PDP had also engaged in a media tirade over the propriety of federal government’s borrowing plan.
While, the PDP had condemned the plan, accusing the APC of mismanaging the “buoyant economy” it inherited from it, the APC through its spokesman, Mallam Bolaji Abdullahi, lashed out at the opposition party, saying it was scaremongering over a loan the present administration was seeking to secure to fix the ailing economy the PDP mismanaged in its 16 years in power.
But the chairman of the Senate committee on Local and Foreign Debts, Senator Shehu Sani, has said that experts and public opinions would guide his committee’s decision before submitting its recommendations for consideration by the Red Chamber.
President Buhari had in a letter of request to the National Assembly dated October 4, 2017, said the external borrowings had been captured in the 2017 Appropriation Act, which has a deficit of N2.356 trillion and provision for new borrowings of N2.321 trillion.
Of the requested loan, Buhari had said issuance of $2 .5 billion in International Capital Market through Eurobonds or a combination of Eurobonds and Diaspora bonds will be used for the financing of the 2017 Appropriation Act and capital expenditure projects in the Act.
He further requested that issuance of Eurobond in the ICM and /or loans syndication by the banks in the sum of $ 3 billion will be for refinancing of maturing domestic debts obligations of the federal government.
Despite the controversy that trailed federal government’s decision, The Senate yesterday in plenary gave its nod to the request by giving President Buhari the go ahead to proceed with the external borrowings.
The approval by the Senate followed the adoption of the report by the Senate committee on Local and Foreign Debts, which were presented in plenary.
Presenting the report, Senator Shehu Sani (Kaduna Central) explained that the loan met Senate’s approval because it is in line with the borrowing plan of the 2017 Appropriation Act.
According to Sani, the terms of the loan are favourable and do not pose any compromise of the integrity, independence and interest of the country and it citizens.
He further stated that the projects to be executed with he loan are essential for economic and social development, adding that when completed, the projects will create jobs.
Deputy Senate president, Ike Ekweremadu, who presided over yesterday’s plenary, noted that the upper chamber will continue to support all efforts by the executive to boost the economy as long as such fiscal instruments are for the betterment of the Nigerian people.
The Senate assured that it will properly oversight all the projects that the loans are meant to support in the 2017 budget.
Senate Probes N20trn Unremitted Stamp Duty Revenue
Senate yesterday said it has discovered N20 trillion stamp duties revenue not remitted in the last five years and is set to probe all criminal dealings pertaining to the unremitted funds.
Senate is aided by the School of Banking Honours (SBH) to uncover the unremitted stamp duties revenue in Nigerian Inter Bank Settlement System (NIBSS) and bring the matter to public glare.
Consequently, the Red Chamber has mandated its Committees on Finance and Banking, Insurance and other Financial Institutions to quickly investigate the issue to curb the illegality and report back within eight weeks for further legislative action.
Yesterday in plenary, a motion on ‘urgent need to investigate allegations of Unremitted Stamp Duty Revenue running into trillions of naira” was moved by Senator John Owan Enoh (APC, Cross River Central) and co-sponsored by 10 other Senators.
In his presentation, Senator Enoh averred that reports abound that over N7 trillion in stamp duties revenue from electronic cashless transactions remain unpaid to the federation since 2015.
He noted that the total volume of the unremitted sum amounted to about N20 trillion.
“Senate is worried that the provision for stamp duty in the revenue framework of the nation’s annual budget for 2015, 2016 and 2017 has been N8.713 billion, N66.138 billion and 16.96 billion respectively, despite the above reports”, the lawmaker stated.
The Senator further disclosed that the Central Bank of Nigeria (CBN) had declared in 2013 that stamp duties revenue accruals from five states only was over N160 billion.
His words: “The senate was apprised of the anti-stamp duties collection stance of the NIBSS currently being accused of systemic diversion of huge revenue flows from stamp duties collection on the electronic transfer receipt on online bank transactions, and the necessity to demand notice on all unremitted stamp duties.
“The duties and responsibilities of the National Assembly is to ensure the harnessing of all sources of revenue to the government of the federation and to curb all forms of wastefulness, corruption and diversion of funds belonging to the federation.
“Aware of the necessity to upgrade and reactivate the provisions of the Stamp Duty Act to include modern and efficient methods of taxation, it is imperative to ensure that the existing Stamp Duty Act is made to work for the federal and state governments”.
Enoh further insisted that the Stamp Duty Act is one of the oldest and enduring laws in Nigeria since 1939, and that application of stamp duties has institutionally been a significant revenue earner for both federal and state governments since independence, thus accounting for almost a quarter of the taxation resources, yearly.
Nigeria’s Total Debt Hits N20trn
Meanwhile, the Debt Management Office (DMO) has declared that Nigeria’s total debt stock has hit N20.37 trillion.
In a statement issued in Abuja yesterday, the DMO said the total public debt stock comprising the federal government, the 36 states and the Federal Capital Territory stood at N20.37 trillion as of September 30.
This shows a marginal increase of 3.6 per cent from the N19.64trillion as of June 30.
A breakdown of the debt stock shows that domestic debt accounted for 76.96 per cent, while external debt accounted for 23.04 per cent.
Specifically, domestic debt stock stood at N15.68tn, which is an increase of 4.1 per cent compared to N15.03tn as of June 30. On the other hand, external debt stock stood at N4.69tn, a marginal rise of 1.9 per cent above the N4.6tn as of June 30.
According to DMO, the debt data lend credence to government’s claims that the public debt stock was skewed in favour of domestic debt, which is partly responsible for the high debt service figures.
It is against this background that analysts have commended the government on its strategy of introducing lower cost external debt into the debt stock in order to reduce debt service costs.
For this purpose, the government is making arrangements to raise external funds of $5.5 billion.
DMO said the amount, which comprises of $2.5 billion in new borrowing to partly finance the N2.32 trillion deficit in the 2017 Appropriation Act and $3 billion to repay maturing domestic debt is expected to achieve a reduction in interest costs of about N75 billion and N91billion respectively when compared to the interest cost of borrowing in Naira in the domestic market.
It also noted that the strategy will also contribute to attaining the target ratio of 60:40 between domestic and external debt.
FG To Raise Tax Revenue To 15%
Meanwhile, the federal government has concluded plans to increase its revenue target, including raising tax revenue from the current six per cent of gross domestic product to about 15 per cent.
The Minister of Budget and National Planning, Udoma Udo Udoma, disclosed this yesterday while highlighting the strategies the federal government plans to adopt in funding the 2018 budget.
President Muhammadu Buhari had last week presented a N8.6 trillion budget proposal to a joint session of the National Assembly for approval for the 2018 fiscal year.
At the presentation of the budget details yesterday, Udoma said the government’s inadequate revenue is the greatest challenge it is facing in its effort to deliver service to the people.
The minister said federal government is determined to increase its revenue target, including raising tax revenue from the current six per cent of gross domestic product to about 15 per cent, to fund the budget in the New year.
He said, “Government’s focus is to maximize the use of revenues from the oil sector and spend in the non-oil sector, to get the non-oil sector driving the economy. Once government revenue is up, the debt service ratio to the GDP would come down. More money would become available for infrastructure to better the life of the people.
“Oil is a wasting asset. This is the time to maximize our revenues from oil and spend them in the non-oil sector. That is basically the strategy of the ERGP (Economic Recovery & Growth Plan) and government’s plan in the 2018 budget”.
Other strategies to boost revenue, he said, include deployment of new technology to improve revenue collections; encourage tighter performance on management of fiscal framework for state-owned enterprises and stronger enforcement action against tax defaulters.
Apart from the tax amnesty programme by the Federal Inland Revenue Service (FIRS) to encourage voluntary payment of tax by Nigerians, the minister said government has adopted other key reform policies to realize its revenue target.
They include new funding mechanisms for joint venture operations in the oil and gas industry to allow for cost recovery in lieu of cash call payments, which constrained new investment in the oil sector.
Udoma also hinted that the federal government has proposed to spend N336.31 billion on the construction and rehabilitation of major roads across the nation in the 2018 budget.
Some of the major roads include the Lagos-Shagamu-Ibandan dual carriageway, Abuja-Abaji road, Kano-Maiduguri road, Enugu-Port-Harcourt dual carriageway, Illorin-Jebba-Mokwa-Bokani road, Calabar-Ugep-katsina Ala road among others.
Some power projects include Mambila hydro, counterpart funding for earmarked transmission lines and substations, rural electrification access program in federal universities, construction of 215MW LPFO/gas power station kaduna, fast power programme accelerated gas and solar power generation among others.
The federal government also allocated N10 billion to be expended on the second Niger Bridge.
Other breakdowns are the Ministry of transport, which got N162.28 billion counterpart funding for rail projects like the Lagos –Kano, Calabar-Lagos, Ajaokuta-Itakpe-Aladja in Warri, Port-Harcout-Maiduguri etc.
Also, N2.03 billion has been proposed for the construction of terminal building at Enugu airport, N8.32 billion for construction of second run-way of Nnamdi Azikwe international airport, Abuja.
…Earmarks N491m For Foodstuffs, Refreshment In Aso Rock
Meanwhile, State House budget for the foodstuff and refreshment is expected to gulp well about N491million in the 2018 budget presented to the National Assembly by President Muhammadu Buhari.
Specifically, N145 million is allocated for food stuff/catering materials supplies in the proposed 2018 budget.
This is, however, different from the allocation of the president and vice-president, both of whom are getting N98 million and N51 million respectively for supply of such foodstuff and catering materials.
There is also an allocation of N17 million for kitchen equipment and cutlery, still under the vice-president’s office.
Also, N136 million was set-aside in the proposed budget to take care of refreshment and meals at the State House, but that is not all.
The president gets a different sum of N26 million for refreshment and meals, while the vice-president gets N18 million for same purpose.