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Senate Approves $5.5bn Loan To Fund 2020 Budget



Pegs oil benchmark at $28pb
The Senate yesterday approved the first component of the federal government‘s external borrowing plan of $5.513 billion, saying it was expedient to do so in the face of the COVID-19 pandemic and its effects on the economy. The lawmakers also jacked up the oil price benchmark from $25 to $28 per barrel to reflect the prevailing crude oil prices in the international market.
The resolution of the Senate followed the consideration and adoption of a report by its Committee on Local and Foreign Debts chaired by Senator Clifford Ordia (PDP, Edo) at plenary.
The lawmakers noted that the loan was in the immediate best interest of Nigeria and its citizens in dealing with the COVID-19 pandemic in a way that the economy will be positioned for quick recovery.
The approved component of $5,513,000,000 is to finance the proposed revised 2020 budget deficit while the remaining two components were  stood down for lack of details and clarity.
The pending loan requests are a sum of $1,248,000,000 to finance priority projects of the federal government in order to address the impact of the COVID-19 pandemic and to improve Nigeria’s food security, and another sum of €995,000,000 to finance state governments facing fiscal challenges arising from the pandemic.
The Senate, therefore asked the executive to furnish it with terms and conditions of the loans to be sourced from different multilateral organisations.
Meanwhile, the Senate has also jacked up the proposed oil benchmark price from $25 per barrel as suggested by the executive to $28 per barrel.
This is also as the Senate adjusted and retained other parameters as contained in the 2020-2022 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) presented to the legislature by President Muhammadu Buhari in the wake of COVID-19 pandemic and consequent adjustments to the 2020 budget.
Subsequently,the Senate had referred the fiscal documents to its Committee on Finance for further legislative actions.
Other projections are oil production output reduced to 1.8 million barrel per day as against executive‘s recommended 1.9mbpd and the exchange rate retained at N360 to $1. GDP Growth Rate is -4.42% and inflation growth rate is put at 14.13%, among others.
The decisions of the Senate followed the adoption of a report of the Senate Committee on Finance chaired by Senator Adeola Olamilekan (APC, Lagos West) after an exhaustive debate at plenary.
This development is a precursor to the consideration of the proposed revised 2020 budget by Senate Committee on Appropriations ahead of its approval by the Senate at plenary.
The Senate has adjourned plenary to Tuesday next week, which according to the Senate President is a precautionary measure to keep safe amid coronavirus pandemic.
He said the revised 2020 budget will be passed on the next legislative day when the Senate resumes.
Spokesman of the Senate, Senator Bashiru Ajibola (APC, Osun) at a briefing of the Senate Press Corps after the plenary, said contrary to erroneous belief in some quarters, the Senate is not a rubber stamp of the executive arm of government, hence its decision to adjust some of the proposals of the federal government contained in the 2020-2022 MTEF/FSP.
In a related development, the House of Representatives yesterday also approved federal government‘s request to borrow $22.799 billion external loan, amidst protest by South East lawmakers over alleged exclusion of the zone from the new borrowing plan.
The House also revised Medium Term Expenditure Framework (MTEF) and Fiscal Policy Paper (FSP) The resolutions were passed after the consideration of the reports of the House Committee on Finance and Aids, Loans and Debt Management at the Committee of Supply, where the lawmakers adopted the recommendations to jerk up the crude oil benchmark from $25 to $28 per barrel and retained 1.9 million crude oil production in the revised MTEF/FSP.