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    Buhari writes Senate, seeks $5.5bn external loan

    • Meets military, security chiefs

    By Ikechukwu Okaforadi, Christiana Ekpa and Lawrence Olaoye

    President Muhammadu Buhari has forwarded to the Senate the request to borrow the sum of five billion, five hundred million dollars from external financial sources, to enable the government finance the capital components of the 2017 budget, as well as finance local debts.
    In a letter forwarded to the Senate President, Bukola Saraki yesterday, Buhari said the external loan is divided into two, including $3.0 billion for re-financing of maturing domestic debt obligations of the federal government, and $2.5 billion for the financing of the federal government’s 2017 appropriation Act and Capital Expenditure projects in the Act.
    According to the letter, while the $2.5billion would be borrowed from international capital market, through Eurobonds or a combination of Eurobond and Diaspora bonds, the $3 billion would be sourced from Eurobond in the international market, and, or through loan syndication by banks.
    The letter further explained that the $2.5 billion external loan would be used to finance the deficit in the 2017 appropriation Act and provide funding for the capital projects in the budget, which it listed to include: Mambilla Hydropower Project, Construction of a second runway at the Nnamdi Azikiwe international Airport.
    Other projects to be funded by this loan are: counterpart funding for rail projects and the construction of the Bodo-Bonny Road, with a bridge across the Opobo Channel.
    On the other hand, the three billion dollars for the re-financing of domestic debts would be used to reduce the debt service levels and lengthen the tenure profile of the debt stock, hence the federal government seeks to substitute maturing domestic debt with less expensive long term external debt.
    According to the letter, the request for the external loan of three billion was based on the resolution arrived at by the Federal Executive Council (FEC) in its meeting held on August 9.
    While reassuring the Senate that the loan request would not lead to increase in the public debt portfolio of the country, President Buhari said in the letter “It is important to note that the proposed sourcing of three billion dollars loan from external sources to refinance maturing domestic debt will not lead to an increase in the public debt portfolio because the debt already exists, albeit in the form of high interest short term domestic debt”.
    He rather said that the substitution of domestic debt with relatively cheaper and longer term external debt will lead to a significant decrease in debt service cost, adding that the proposed refinancing of domestic debt through external debt will also achieve more stability in the debt stock while also creating more borrowing space in the domestic market for the private sector.
    Meanwhile, while urging the Senate to give the request expeditious consideration and passage, President Buhari reminded them to note that the external loan request, being a market based transaction, the terms and conditions of the borrowing can only be determined at the point of issuance of finalization based on prevailing market conditions in the International Capital Market.
    In another development, president Muhammadu Buhari yesterday met with service chiefs at the New Banquet Hall of the Presidential Villa behind closed door
    Those who were at the meeting included the Chief of Defence Staff, Gabriel Olonisakin; Chief of Army Staff, Tukur Buratai; the Chief of Naval Staff, Rear Admiral Ibok- Ete Ekwe Ibas and the Chief of Air Staff, AVM Sadique Abubakar.
    The Minister of Defence, Mansur Dan-Ali and the National Security Adviser, Babagana Monguno were also in attendance.
    Also present were the Director General of the State Security Services, Lawal Daura; the acting Director of the Nigeria Intelligence Agency, Arab Yadam and a representative of the Inspector-General of Police.
    Those officials at the meeting refused to entertain questions from newsmen after the meeting.

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