Details Of Buhari’s Proposal To Borrow $29.96bn Emerges
Details of the federal government’s $29.96 billion External Borrowing (Rolling) Plan for 2016-2018 have revealed that 61.2 per cent of the foreign loans have been earmarked for bankable infrastructure projects while social programmes in health and education, the federal government’s budget support facility, agriculture and the Eurobond issue account for the balance.
Also, of the $29.96 billion to be borrowed, the federal government will take up 86.3 per cent of total borrowings, or $25.8 billion, while the 36 states of the federation and the Federal Capital Territory (FCT) will account for the balance of $4.1 billion.
Other than the planned Eurobond, five multilateral institutions are expected to provide the $29.96 billion.
They are the World Bank, African Development Bank (AfDB), Japan International Co-operation Agency (JICA), Islamic Development Bank and China EximBank.
President Muhammadu Buhari on Tuesday presented the plan to the National Assembly for approval to enable his administration borrow, in order to address the funding gap over the next three years.
A breakdown of the external borrowing plan exclusively obtained by THISDAY from the Ministry of Finance showed that of the $29.96, 61.2 per cent would go towards infrastructure projects comprising the Mambila hydro-electric power plant – $4.8 billion; railway modernisation coastal project (Calabar-Port Harcourt-Onne Deep Seaport segment) – $3.5 billion; Abuja mass rail transit project (Phase 2) – $1.6 billion; Lagos-Kano railway modernisation project (Lagos-Ibadan segment double track) – $1.3 billion; Lagos-Kano railway modernisation project (Kano-Kaduna segment double track) – $1.1 billion; and others – $6 billion.
Other than funds to be assigned to infrastructure projects, the federal government also intends to raise $4.5 billion through a Eurobond issue, but the document from the finance ministry was silent on what the funds raised from the issue will used for.
The federal government also intends to borrow $3.5 billion from foreign sources for budget support over the next three years. The document also showed that $2.2 billion will be dedicated to social projects in the health and education sectors, $1.2 billion in agriculture, while $200 million has been set aside for economic management and statistics.
Of the $2.2 billion assigned to social projects, the federal government will account for the bulk of the projects amounting to $2.1 billion while the states will account for a measly $100 million.
In the area of agriculture, the federal government will account for 75 per cent of the funds borrowed, or $900 million, while states will be expected to borrow $300 million.
Investigations further revealed that the planned Eurobond issue at the international capital market is the only commercial source of funding being targeted by government, as others are concessionary loans with low interest rates and long tenors.