By Camillus Eboh
Nigerian President Muhammadu Buhari has recently asked parliament to approve plans to borrow $30 billion abroad to fund infrastructure plans until 2018, according to a letter read out on Tuesday in the assembly.
Nigeria, an OPEC member, slipped into recession for the first time in more than 20 years in the second quarter largely due to low global oil prices. Crude oil sales account for about two-thirds of government revenue.
The borrowing plans included the sale of Eurobonds worth $4.5 billion and a planned budget support of $3.5 billion, according to the letter from Buhari.
“The projects cut across all sectors with special emphasis on infrastructure, agriculture, health, education, water supply, growth and employment generation, poverty reduction,” said the letter read out in both chambers by the Senate President and House of Representatives speaker.
“It has become necessary to resort to prudent external borrowing to bridge the financing gap,” Buhari said in the letter. The borrowing was for the period until 2018, he added.
Buhari had already sent a draft budget for 2017 to parliament for approval, detailing plans to spend a record 6.866 trillion naira ($22.55 billion) aimed at pulling Africa’s biggest economy out of recession.
The planned spending is up from this year’s 6.06 trillion naira budget and seeks to stimulate growth by funding infrastructure development to increase manufacturing, create jobs and reduce costly imports.
The government has held talks for months with the World Bank, China and other institutions to fund a 2016 budget deficit of 2.2 trillion naira but so far only the African Development Bank has publicly confirmed a planned loan of $1 billion.
Nigeria also wants to sell $1 billion in Eurobonds by the end of the year although as of Friday no bank to arrange the issue had been appointed yet.
Problems related to oil prices have been exacerbated by militant attacks on energy facilities that have cut crude production, which was 2.1 million barrels per day (bpd) at the start of 2016, by 700,000 bpd.
In an effort to blunt the appeal of militancy in the Niger Delta oil hub, Buhari also asked lawmakers to spend another 35 billion naira within the 2016 budget on an amnesty plan for former fighters.
Cash salaries had been paid to ex-militants only until May because the amnesty’s original budget of 20 billion naira had fallen short. “This is creating a lot of restiveness and compounding the security challenge in the Niger Delta,” Buhari said in a letter.
Oil output has improved to 1.9 million bpd, the petroleum ministry said in a tweet late on Monday, without giving details.