President Muhammadu Buhari is seeking domestic and foreign loans to bridge the liquidity crisis caused by the COVID-19 crisis in the 2020 budget.
The National Assembly resumed plenary today after a five-week COVID-19 recess and the Senate immediately approved President Muhammadu Buhari’s request for N850 billion loan to fund shortfalls in the 2020 budget.
Ahmed Lawan, Senate president, read the President’s letter, which did not provide details for the application of the fund. He asked the finance and appropriation committee to liaise with Minister of Finance for the details. Under normal circumstances, the National Assembly would have requested for the details, which should be attached, before considering the application. The lawmakers overlooked that ostensibly because of the COVID-19 global crisis.
Lawan explained that the pandemic has impacted negatively on the 2020 budget and that the National Assembly will do its best to assist the executive sustain the war against coronavirus.
The frightened lawmakers had hurriedly closed shop in March when they felt that Nigeria’s response to the pandemic was below international protocol but were recalled to approve the loan and formulate other necessary responses which may aid the federal government in the increasingly difficult war against COVID-19.
Domestic loans have higher interest rate than foreign loans and shorter maturing windows but under the circumstances, many foreign institutions will not loan out money amidst COVID-19 uncertainties.
Abdullahi Yahaya, Senate leader, moved for the suspension of Rule 11 to enable members observe social distancing and speak from seats other than their normal assigned seats.
Nigeria has also requested for a $3.4 billion loan from International Monetary Fund, IMF, to enable the government contain the pandemic, which may be approved Tuesday. Zainab Ahmed, minister of finance, budget and national planning had announced Nigeria’s application on April 6 and said it may be approved within 12 weeks. The Breton Wood institution is meeting to consider the application.
If approved, it would be repaid in five years. It is the biggest COVID-19 related loan IMF has approved for an African country. It had approved $1 billion for Ghana.
Nigeria’s intention to borrow $27.4 billion to fund some projects in the budget was dropped as the outbreak of the virus crippled the bench the application was based on.
Kristalina Georgieva, managing director of IMF, said on April 7, “Nigeria’s economy is being threatened by the twin shocks of the COVID-19 pandemic and the associated sharp fall in international oil prices.”
She confirmed that African countries have requested for a total loan of $114 billion to bridge shortfalls caused by their response to the pandemic.
Put together, the Nigerian government has spent less than N20b on COVID-19. It has released about N6.5b to the NCDC and N10bn to Lagos State government. An unspecified amount of money is being disbursed to some beneficiaries seen as the poorest of poor Nigerians. The Central Bank of Nigeria, CBN, has announced a stimulus package of about N1.6 trillion for affected households and pharmaceutical and concerned manufacturing industries.