President Muhammadu Buhari has sought the approval of the Senate for an external loan of 6.183 billion dollars, to fund the deficit of N5.602triillon in 2021 Appropriation Act.
This is contained in a letter addressed to the President of Senate, Dr Ahmad Lawan and read at plenary on Tuesday.
Buhari said the request was in line with the provisions of section 21(1) and 27(1) of the Debt Management Office (DMO) Establishment Act 2003.
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He said the loan would be sourced from a combination of multilateral and bilateral lenders and the International Capital Market (ICM) through issuance of Euro bonds.
Buhari said accessing the ICM would be relatively cheaper, thereby moderating debt service costs and ensuring an increase in external reserve.
Last Month, Investorsking recalled that there was a controversy when Edo State Governor, Godwin Obaseki had raised concerns over the financial trouble Nigeria might find herself due to the continuously rising debt profile.
In a recent report carried out by PWC, it was reported that:
“Actual debt servicing cost in 2020 stood at N3.27 trillion and represented about 10 percent over the budgeted amount of N2.95 trillion. This puts the debt-to-revenue ratio at approximately 83 percent, nearly double the 46 percent that was budgeted.
“This implies that about N83 out of every N100 the FG earned was used to settle interest payments for outstanding domestic and foreign debts within the reference period. In 2021, the FG plans to spend N3.32 trillion to service its outstanding debt. This is slightly higher than the N2.95 trillion budgeted in 2020”.
According to DMO Nigeria’s total public debt as at December 31, 2020, was N32.915 Trillion.
