Senate approves additional $200m loan for FG

Minister of Finance, Dr Ngozi Okonjo-Iweala

The Senate on Tuesday approved the request of President Goodluck Jonathan to raise additional $200m Diaspora Bond from the international capital market.

Jonathan had, in a letter addressed to the Senate President, David Mark, on February 4, 2014, sought the approval of the red chamber to increase the initial $100m earlier approved by the Senate in the 2012 – 2014 Borrowing Plan.

The President had explained that the $200m increment being sought was necessary in order to fund critical infrastructure in Nigeria and to also afford citizens in the Diaspora an opportunity to invest in the development of their country.

The Chairman of the Joint Senate Committee on Local and Foreign Debts and Chairman of Finance which worked on the request, Senator Ehigie Uzamere, while presenting the report, noted that several meetings were held with officials of the Debt Management Office in the course of their assignment.

Uzamere added that his committee considered Nigeria’s Medium Term Debt Management Strategy (2012-2015); The Debt Sustainability Analysis (2013); Fiscal Responsibility Act (2007); Debt Management Act (2003) and the 2014-2016 MTEF/FSP, to arrive at its submission.

He noted that the committee considered the $100m earlier approved in the 2012 to 2014 Borrowing Plan as too small, “considering the life of Nigerians in Diaspora, hence may deny many interested Nigerians in Diaspora”

Uzamere said that the dwindling revenue from crude oil sale had made it necessary to diversify sources of funding for the government.

He said, “The Diaspora Bond is necessary to create more space in the domestic market for other borrowers, particularly private firms.

“The Federal Government plans to utilize the proceeds of the Diaspora Bond in the construction of key capital projects in priority sectors of the economy.”

He explained that proceeds from the bond would be used to fund the construction of the second Niger Bridge; The Lagos-Ibadan Expressway; and procurment of facilities for the Abuja Medical City.

Uzamere said, “The concept of raising funds through the Diaspora bond has been employed by several countries over the years with tremendous success.

“The issuance of the Diaspora Bond will afford the diasporans the opportunity to invest in the development of the country while earning good returns for their investment.

“The committee believes the projects that the Federal Government has chosen to utilise the funds on critical infrastructure that will impact on the economy positively.”

After the Senate had adopted and approved the committee’s recommendation, Mark expressed the confidence that the funds would be judiciously utilised by Jonathan administration.

The Senate adjourned sitting till Tuesday, March 31 to enable members to participate in the general elections in their various constituencies.