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NASS Resume Discussions on N23.7tn Loan Restructuring 

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Nigeria's National Assembly

Deliberations on the request by President Muhammadu Buhari to the National Assembly for restructuring of Ways and Means Advances (WMAS) from the Central Bank of Nigeria are expected to start today, Tuesday January 17, 2023.

The Federal Parliament had suspended discussions on the issue late last year and embarked on Christmas and New Year break after passing three separate bills including 2023 Appropriation Bill, the 2022 Supplementary Appropriation Bill and the Finance Bill 2022 on December 28, 2022.

The request made by President Buhari is that the Senate and the House of Representatives should approve the modification of the WMAs given to the Federal Government by the Central Bank of Nigeria.

Buhari had informed the lawmakers that the balance of the WMAs as of December 19, 2022, was N23,719,703,774,306.90.

Even though the National Assembly had indicated interest to engage the presidential request, nothing concrete is yet to be done.

In the midst of this delay in restructuring the loan-to-bond band demand, the President had alerted that Nigeria might be paying an additional sum of N1.8tn as interest in 2023 if the National Assembly eventually rejected his request.

Reports revealed that the Nigerian Government paid interests of N4.12tn between 2019 and 2022 on the loans it got from the apex bank through WMAs.

This disclosure was contained in the data obtained from the Medium-Term Expenditure Framework and Fiscal Strategy Papers and the public presentation documents of the approved budgets by the Ministry of Finance, Budget and National Planning.

Recall that the Senate had rejected the domestic borrowing and had passed it into the second chamber of the parliament to deliberate and give their decision.

Meanwhile, insiders in the House of Representatives are saying the tendency of the House toiling the same line as its counterpart in the Senate is high.

While some members of the House were of the view that the domestic borrowing not only contravened the CBN Act but also the Fiscal Responsibility Act, others lawmakers noted that the government must borrow to confront the hardship being faced by Nigerians.

Some lawmakers lamented that the nation’s debt profile has continued to grow, especially under the administration of President Muhammadu Buhari.

They also reiterated the importance of loans to the government but stated that the loans should be channeled toward addressing the needs of the masses.

However, Ahmed Lawn, the President of the Senate, Ahmad Lawan, had said the chamber would revisit the WMAs loan.

Many Nigerians have bemoaned the rise in the debt profile of the country and have attributed the huge debt to the challenges confronting the nation.

A release by the Debt Management Office (DMO) in December last year had revealed that Nigeria’s debt profile rose by over N1 trillion in just three months which is between June and September 2022.

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Nigeria Secures $1.05bn Oil-Backed Loan to Bolster Economy

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Bola Tinubu

Nigeria has successfully secured a significant oil-backed loan worth $1.05 billion from the African Import Export Bank.

The syndicated loan, set to be disbursed next month, represents a crucial step in the country’s efforts to revive its economy and enhance foreign exchange liquidity.

This loan forms part of a larger $3.3 billion prepayment facility orchestrated by Afreximbank, with repayment terms intricately linked to crude oil cargoes from the Nigerian National Petroleum Company Ltd.

The agreement, confirmed by Afreximbank’s Senior Executive Vice President for Finance, Administration, and Banking, Denys Denya, underscores the confidence in Nigeria’s oil reserves and its potential to generate revenue even amid global economic uncertainties.

The financial injection is expected to provide a much-needed boost to Nigeria’s economy, which has been grappling with various challenges, including fluctuating oil prices, currency devaluation, and inflationary pressures.

By leveraging its oil reserves, Nigeria aims to enhance its foreign exchange reserves and stabilize its local currency, thereby bolstering investor confidence and stimulating economic growth.

The timing of this loan is particularly significant as Nigeria seeks to navigate the aftermath of the COVID-19 pandemic and the economic disruptions caused by geopolitical tensions, including the Russia-Ukraine conflict.

With oil prices experiencing fluctuations and market uncertainties looming, the loan serves as a strategic mechanism to mitigate financial risks and enhance economic resilience.

The Nigerian National Petroleum Company Limited had previously announced plans to utilize funds from the $3.3 billion financing deal secured from Afreximbank to support the Federal Government in stabilizing the country’s exchange rate.

The adoption of a conservative crude oil price benchmark of $65 per barrel for the loan facility reflects a prudent approach to risk management, ensuring financial stability amidst volatile market conditions.

Furthermore, the loan disbursement is strategically tied to future oil sales, with repayments structured to align with anticipated revenue streams.

This approach not only mitigates the risks associated with oil price volatility but also ensures a sustainable and manageable debt repayment process.

While the loan provides immediate liquidity and financial flexibility, Nigeria remains committed to implementing comprehensive economic reforms to drive long-term sustainable growth.

The government’s efforts to diversify the economy, enhance infrastructure development, and promote investment in key sectors will complement the benefits derived from the oil-backed loan, fostering inclusive economic development and prosperity for all Nigerians.

As Nigeria embarks on this transformative journey, the successful acquisition of the $1.05 billion oil-backed loan represents a pivotal milestone in the country’s economic recovery efforts. With prudent fiscal management and strategic resource utilization, Nigeria is poised to unlock its full economic potential and emerge stronger in the post-pandemic era.

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Nigeria in Talks with World Bank for $1bn Loans to Aid Displaced Persons and Rural Development

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world bank - Investors King

In a bid to tackle the challenges confronting internally displaced persons (IDPs) and bolster rural development initiatives, the Nigerian government has entered negotiations with the World Bank for loans totaling $1 billion.

This financial infusion aims to address the pressing needs of IDPs and uplift rural communities across the nation.

The proposed loans, detailed in World Bank documents titled ‘Solutions for the Internally Displaced and Host Communities Project’ and ‘Rural Access and Agricultural Marketing Project – Scale Up,’ signify a concerted effort by the government to provide comprehensive support to vulnerable populations and enhance economic opportunities in rural areas.

With an allocation of $500 million earmarked for IDP assistance and an additional $550 million dedicated to rural access and agricultural marketing, these loans underscore the government’s commitment to fostering inclusive growth and resilience within communities grappling with displacement and economic challenges.

The World Bank’s involvement underscores the global community’s recognition of Nigeria’s efforts to address humanitarian crises and promote sustainable development.

The loans are poised to fund initiatives aimed at improving access to basic services, fostering social cohesion, and enhancing livelihood opportunities for IDPs and their host communities, particularly in conflict-affected regions of the country.

Furthermore, the infusion of funds into rural access and agricultural marketing endeavors is poised to unlock new pathways for economic growth, empower local farmers, and bridge the gap between rural communities and broader markets.

As negotiations progress, stakeholders anticipate transformative impacts that will propel Nigeria towards a more prosperous and inclusive future for all its citizens.

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Senate Initiates Probe into N30tn Ways and Means Loans under Buhari Administration

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Muhammadu Buhari

The Nigerian Senate has embarked on a comprehensive investigation into the disbursement and utilization of the N30 trillion Ways and Means loans obtained by the Central Bank of Nigeria (CBN) during the administration of former President Muhammadu Buhari.

The Ways and Means facility allows the CBN to provide financial support to the government to cover budget shortfalls.

The decision to probe the massive loans comes amid concerns about the transparency and accountability surrounding the utilization of these funds, particularly as the country grapples with economic challenges, food crises, rising inflation, and worsening insecurity.

The Senate’s investigation aims to shed light on how the substantial overdrafts from the CBN were acquired and expended under the leadership of former President Buhari.

There is growing apprehension that the indiscriminate spending of the overdrafts, particularly during Godwin Emefiele’s tenure as CBN governor, may have contributed significantly to the current economic predicament facing the nation.

The probe will delve into the details of the N30 trillion overdrafts, with a specific focus on examining the purpose for which the funds were allocated and how they were utilized.

Also, the Senate will scrutinize the N10 trillion disbursed under the Anchor Borrowers Scheme, as well as the utilization of $2.4 billion out of the $7 billion earmarked for forex transactions.

The initiative underscores the Senate’s commitment to ensuring transparency, fiscal responsibility, and prudent financial management in the country’s economic affairs.

It is anticipated that the probe will unearth vital insights into the financial transactions of the past administration, enabling corrective measures to be taken to address any mismanagement or discrepancies discovered.

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