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Buhari seeks fresh N819bn loan, domestic debts hit N22.57tn

As a result of the Federal Government’s Wednesday proposal of a last-minute supplementary budget for the fiscal year 2022, Nigeria’s domestic debt increased to N22.57 trillion.

Major General Muhammadu Buhari (ret.), the President, is requesting the National Assembly’s approval for a N819.54 billion supplemental budget, which it intended to finance with domestic borrowing.

On Wednesday, Buhari submitted the N819.5 billion supplementary budget for the fiscal year 2022 to the National Assembly for approval. This money will be used to repair various pieces of infrastructure that were damaged by floods in various states across the nation a few months ago.

According to the explanation provided by the President in a letter read aloud in plenary by the President of the Senate, Ahmad Lawan, the supplementary budget is intended for the capital expenditure portion of the budget for 2022, resulting in an increase in the deficit to N8.17 trillion.

“The year 2022 has witnessed the worst flood incident in recent history, which has caused massive destruction of farmlands at a point that is already closed to the harvest season,” the letter read.

This may exacerbate the country’s nutrition and food security issues. The flood has also destroyed bridges across the country that are essential to the movement of goods and services as well as the road infrastructure in all 36 states and the FCT (Federal Capital Territory).

“The flood had a similar impact on the water industry, and it is necessary to finish some critical ongoing projects that have already been completed to about 85 percent. Water supply, dam, and irrigation projects are among the nine crucial projects proposed in the sector.

“I have approved an appropriation of N819.536 billion for the supplementary budget for 2022, all of which are capital expenditures. Domestic borrowing will be used to pay for the additional, which will result in a budget deficit of N8.17 trillion and a deficit to GDP ratio of 4.43 percent in 2022.

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The proposal was quickly sent to the Senate Committees on Appropriation, Finance, Works, Water Resources, and Agriculture by the President of the Senate in anticipation of the new year.

To finance a portion of the N6.26 trillion budget deficit, the Federal Government initially planned to borrow N5.01 trillion, with N2.51 trillion of domestic debt.

The Federal Government’s domestic borrowing is anticipated to reach N3.33 trillion in 2022 with the newly proposed N819.54 trillion domestic debt.

As of December 2021, the domestic debt stock of the Federal Government was N19.24 trillion, according to data from the Debt Management Office.

The domestic debt stock had increased to N21.55 trillion by September 2022, indicating that the Federal Government had borrowed N2.31 trillion thus far.

In accordance with its strategy, the Federal Government can still accommodate N1.02 trillion more in domestic debt with the additional borrowing of N819.54 trillion.

The PUNCH likewise discovered that the National Government’s homegrown obligation rose from N8.4tn as of June 2015 to N21.55tn as of September 2022.

This showed an increment of N13.15tn or 156.55 percent under Buhari.

According to the proposed budget for 2023, the Federal Government intends to spend N4.5 trillion on domestic debt interest charges by 2023, as reported by the PUNCH.

This represents a 243.51% increase from the N1.31tn proposed allocation for domestic debt interest charges in 2016.

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The World Bank stated in its most recent Africa’s Pulse report that Nigeria’s public debt was troubling because of the rising debt service-to-revenue ratio.

The bank says that by the end of 2022, the debt service to revenue ratio could be at 102.3 percent.

The President, Major General Muhammadu Buhari (retd.), presented the 2023 appropriation bill to a joint session of the National Assembly recently. noted that the nation consistently met its debt service obligation despite its revenue difficulties.

“We have consistently met our debt service commitments despite our revenue challenges. As soon as they were due, staff salaries and statutory transfers were also paid,” Buhari continued.

However, Finance Minister Zainab Ahmed had acknowledged that Nigeria was having difficulty servicing its debt when she spoke at the recent launch of the World Bank’s Nigeria Development Update titled “The urgency for business unusual.”

She stated, “Already, we are struggling with being able to service debt because even though revenue is increasing, expenditure has been increasing at a much higher rate, so it is a very difficult situation.” Despite the fact that expenditure has increased, revenue has increased.

In the meantime, the President, Major General Muhammadu Buhari (ret.), restructures debt. has sent a request for N23.7 trillion in Ways and Means Advances restructuring approval to the National Assembly.

Ahmad Lawan, the President of the Senate, addressed the plenary on Wednesday; and Femi Gbajabiamila, Speaker of the House of Representatives, read the request to members of the respective chambers.

The President wrote, “The Ways and Means Advances by the Central Bank of Nigeria to the Federal Government has been a funding option to the Federal Government to cater for short-term or emergency finance to fund delayed government expected cash receipt of fiscal deficit” in the request titled “Restructuring of Ways and Means Advances.”

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As of December 19, 2022, the Ways and Means balance is N23,719,703,774,306.90. The following conditions apply to my approval of the securitization of the Ways and Means balances: N23.7 trillion; 40 years of tenure; three-year moratorium on principal repayment; pricing has an interest rate of 9%. In order to make it possible for the same to be put into action, your concurrence and approval are sought.

Lawan forwarded the request to the Senate Committee on Finance for a Thursday report, while Gbajabiamila forwarded it to the House Committee on Aids, Loans, and Debt Management.

The Senate President mentioned that the 2023 Appropriation Bill and Buhari’s request for a N819.5 billion supplementary budget for 2022 would be considered and approved on Thursday.

“We are referring these letters to our committees on Appropriation, Finance, Works, Water Resources, and Agriculture today,” Lawan stated.

“They must work on it and make sure we follow the proper procedures.” In that regard, the CBN, the Minister of Finance; Ministers of Agriculture, Water Resources, and Works will be invited to participate in this process and should make themselves available to ensure that we receive accurate information between now and tomorrow.

“Tomorrow (Thursday), by the finesse of God, will be the last authoritative day for the ninth Senate this year. We must receive the report on the 2023 Appropriations Bill from our Committee on Appropriations, so it will be quite busy for us.

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