Both chambers of the National Assembly on Wednesday approved the request by President Muhammadu Buhari for a $500m Eurobond.
Vice President Yemi Osinbajo had made the request as acting President, while Buhari was away on medical vacation in the United Kingdom.
The bond, as explained in a letter to the Senate and House of Representatives, is to be accessed from the international capital market and used to fund the deficit in the 2016 budget in line with the borrowing plans already prepared for that purpose.
The letter to the Senate read in part, “The Senate may wish to refer to item 229 and 244 of the 2016 Federal Government of Nigeria’s Appropriation Act, which provided for a deficit of N2.204bn and new borrowing of N1.818bn, respectively. The Act also provided for domestic borrowing of N1.182bn and external borrowing of N635bn in line with item 245 and 246, respectively.
“The Senate may also wish to note that while the approved domestic borrowing has been fully incurred, the N635bn on external borrowing has not been fully accessed. The external borrowing incurred today consists of $600m from the African Development Bank and $1bn Eurobond for the international capital market only.
“The Senate may wish to note that the proceeds of the Eurobond are to be used as funding sources to finance the budget deficit, including capital expenditure projects, as specified in the 2016 Appropriation Act.”
While raising the motion for the approval on Wednesday, the Deputy Senate Leader, Senator Bala Ibn Na’Allah, said due to the urgency of the request, it was necessary for the lawmakers to approve the bond.
The Deputy President of the Senate, Senator Ike Ekweremadu, who presided over the session, put the request to voice vote and it was granted.
In approving the request, the House of Representatives recalled that while the domestic borrowing had been incurred, the remaining N2.204tn external borrowing had not been fully accessed.
The Speaker, Mr. Yakubu Dogara, presided over the session where the Eurobond request was approved.
A report of the Committee on Loans/Aids and Debt Management, which the House acted upon, observed that there were no risks in accessing more funds.
“Based on the 2016 Appropriation Act, and applying the average exchange rate, there is a headroom to access further international funds,” the report stated.