President Buhari has, in a statement, explained that the Coronavirus pandemics and the falls of oil prices in the international market have made borrowing from the global capital market.
He further explained this in the letter to the House of Representatives, saying that he was a concern to ask the House to grant him the approval of borrowing N850 billion Naira from the domestic capital market to finance deficits in the 2020 budget.
Mr. President said that the borrowing of the N850 billion had been formerly scheduled in the budgets to be borrowed from the internationals capital markets, which was not possible now as a result of the current global economic lockdown.
In the letter presented to the House of Representative, Presidents Buhari noted that external borrowing from the international capital market would increase Nigeria’s external reverses and also make a way in accessing the low cost and longer tenure bonds as well as avoid crowding out the private sector borrowers.
The was entitled, ‘Request for a Resolutions of the National Assemblies to raise N850 billion in new external borrowing plan in the 2020 Appropriation Act in naira from the Domestic Capital Market.’
“The House of Representatives may wish to recall that the 2020 Appropriation Act provides for N1.594 Trillion in new borrowing comprising N 744 billion Naira in domestics borrowing and N850 billion in new extern borrowings,” the letter said.
“These borrowings were to part-finances the deficits of N2.175 trillions.
“The House of Representatives may wishes to know that the external borrowing from the international capital markets increases Nigeria’s foreign’s reserves, provides access to low costs and longer tenures bonds, as well as avoids crowding out privates sectors borrowers who may also wish in accessing the domestics capital markets.
“However, recents developments in the global economics environment as a results of the coronavirus pandemics and decline in oil prices have made it unattractive to borrow from the international capital markets at this period.
“To ensure there are adequates funds to finance projects and programmes in the 2020 budgets, I at this moment seeks the House of Representatives approvals by way of resolutions to raise N850 billion Naira from the domestic capital markets.”