Budget Deficit: Presidency seeks Nat. Assembly approval for $500m loan

Budget Deficit: Presidency seeks Nat. Assembly approval for $500m loan

The Presidency is seeking the approval of the National Assembly to raise an additional $500 million Eurobond from the international capital market.

The fund, according to Acting President Yemi Osinbajo, is required to finance the total sum of N4.023 trillion budget deficit in the 2016 and 2017 fiscal
years respectively.

In a letter read by Senate President Bukola Saraki at plenary, Osinbajo assured that the proceeds of the Eurobond will be used as funding sources to finance the budget deficit, including capital expenditure projects as  specified in the 2016 Appropriation Act.

The letter was written when Osinbajo was still the Acting President. Although he formally handed over to President Muhammadu Buhari on Monday this week, the letter was read on the floor of the chamber this week.

Osinbajo said the terms and conditions of the eurobond may only be determined at the point of issuance.

The letter reads in part: “Following the over-subscription of the recent USD 1 billion Eurobond issuance, we wish to take advantage of favourable market conditions to issue a Eurobond debt instrumentof USD 500 million to fund the implementation of the 2016 budget, which is still ongoing.

“The Senate President may wish to note that in line with the requirement of securities issuances in the ICM, a specific resolution of the National Assembly, as a firm confirmation of the approval of the Legislature for the
Federal Government of Nigeria (FGN) to borrow the USD 500 million through the issuance of a Eurobond debt instrument in the ICM is required.

“It is important to note that the previous issuances of USD 500million, USD 1 billion (consisting of two tranches of USD 500 million) and USD1 billion in January 2011, July 2013 and February 2017, respectively, were issued at coupons of 6.75percent, 5.125percent, 6.375percent and
7.875percent based on the prevailing market conditions.

“The Debt Management Office and the Federal Government’s appointed Transaction parties to the issue are committed to working assiduously to secure the best terms and conditions for the Federal Republic of Nigeria”.

According to the Acting President, the Federal Government planned to issue the Eurobond between February and March 2017, subject to market conditions, in order to meet Government approved capital expenditure funding plan.

To this end, Osinbajo called for quick action towards the passage of resolution of both chambers of the National Assembly on the matter.

Related Posts