The House of Representatives on Tuesday approved Federal Government’s request to raise the sum of N850 billion from the domestic capital market.
The approval was given by the lawmakers after the clause-by-clause consideration of the bill at the Committee of Supply chaired by the Speaker, Hon. Femi Gbajabiamila.
In his lead debate, the Majority Leader, Hon. Alhassan Ado Doguwa urged members to accelerate the consideration of President Muhammadu Buhari’s “request to raise N850 billion in the New External Borrowing Plan of the Federal Government in the 2020 Appropriations.”
Hon. Ado-Doguwa who explained that the funds have been captured in the 2020 Appropriation, underlined government’s resolve to source the fund from the local capital market instead of the international capital market.
He explained that the move will help increase the profit of the local capital market.
President Buhari via a letter addressed to the Speaker, dated March 24, 2020, explained that the 2020 Appropriation Act provided for N1.595 trillion of new borrowing, comprising of N744.986 billion of new domestic borrowing and N850 billion of new external borrowing.
“These borrowings were to part-finance the 2020 budget deficit of N2,175,197,885,232.
“Furthermore, the House of Representatives may wish to note that external borrowing from the international capital markets increases Nigeria’s external reserves, provides access to lower cost and longer-tenured funds, as well as avoids crowding out private sector borrowers who also wish to access the domestic capital market.
“However, recent developments in the global economic environment, as a result of the coronavirus pandemic and decline in international oil prices, have made it less attractive to borrow from the international capital markets, at this time.
“To ensure that there are adequate funds to finance capital projects and programmes in the 2020 budget, I hereby seek the House of Representatives’ approval, by resolution, to raise the N850 billion of new borrowing, in the naira, from the domestic capital market, instead of from international capital markets.
“However, it remains our intention to access the international capital markets when global conditions improve, to refinance this N850 billion of new borrowing and optimize the benefits inherent in external borrowing.
“As presently, the conditions in the domestic capital market are favourable, in terms of availability of funds and relatively low-interest rates, this course of action is deemed prudent given our current realities.
“I have directed the Minister of Finance, Budget and National Planning to make herself available to provide any additional information or clarification which you may require.
“I trust that this request will be expeditiously considered to accelerate the raising of the N850 billion in new borrowing from the domestic capital market, to part-finance the 2020 budget deficit as well as to deliver critical projects and programmes to the Nigerian people,” Buhari said in the letter.