The Senate has given its nod to President Tinubu’s request to borrow $7.8 billion and €100 million, forming part of the Federal Government’s 2022–2024 borrowing plan. The approval came after the Senate reviewed and adopted the report of its committee on Local and Foreign Debt during Saturday’s plenary session.
President Tinubu clarified that the loan facility, approved by the Federal Executive Council under former President Muhammadu Buhari on May 15, 2023, was essential for financing critical sectors such as infrastructure, health, education, agriculture, and addressing security challenges.
Highlighting the necessity of the foreign loan, Tinubu emphasized its role in bridging the financial gap and restoring normal economic activities in the country. The funds are earmarked for the development of infrastructure, agriculture, health, education, water supply, security, employment, and financial management reforms.
Additionally, the Senate approved Tinubu’s request to securitize the Central Bank of Nigeria’s (CBN) N7.3 trillion Ways and Means advances to the Federal Government. In a letter read by the Senate President, Tinubu explained that securitization aimed to reduce debt service costs and extend the repayment period of existing loans.
The Ways and Means provision allows the government to borrow from the Central Bank in cases of short-term or emergency financing needed to support delayed government projected cash receipts or fiscal shortfalls. Notably, the interest rate for the securitized Ways and Means advances has been reduced to 9% per annum, a significant decrease from the MPR of 0.3%.
President Tinubu underscored that the lower interest rate would result in savings that could be channeled to reduce the budget deficit.