3 Things To Know About $5.5 Billion Loan Approved By Senate
On Tuesday, the upper chamber of Nigerian parliament, the Senate gave a green light to the federal government’s plan to borrow $5.5 billion from foreign investors.
Here are 3 things you need to know about the loan.
1. The Loan Is Aimed At Plugging Deficit In 2017 Budget: One may be surprised that the government is pushing ahead with the loan while 2018 budget is up for passage and the financial year is coming to an end. But there you have it.
You may recall that the 2017 budget had a deficit of 2.3 trillion naira and the loan was sought by President Muhammad Buhari in a letter to the senate in October this year to help plug it.
2. Part Of The Loan Will Be Used To Pay Debts: Of the $5.5 billion dollars to be borrowed, $2.5 billion, about 762 billion naira will be borrowed overseas through Eurobonds.
This sum will be ploughed back into the economy to finance the budget deficit.
The remaining balance of $3 billion, about 915 billion naira will be used to pay back money borrowed at home that is due for repayment. This is believed to help lower Nigeria’s funding costs.
3. The Loan Will Be Dedicated To Financing Key Capital Projects: The loan is also expected to help finance key infrastructure that covers rail, transportation and power.
Some of the capital projects include: the Mambila Hydropower Project, construction of a second runway at the Nnamdi Azikiwe International Airport, as well as counterpart funding for rail projects and the construction of the Bodo-Bonny road with a bridge across the Opobo channel.
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