Senate Rejects FG’s $30bn Borrowing Plan, Presidency, DMO Defend Loans

• Speaker, Gbajabiamila lobby lawmakers on foreign borrowing

Ndubuisi Francis, Omololu Ogunmade and Damilola Oyedele in Abuja

The Senate yesterday threw out President Muhammadu Buhari’s request to raise $29.9 billion in foreign loans over a three-year period.

The request was thrown out without being subjected to debate through a voice vote, after the motion for its consideration was moved by the Senate Leader, Senator Ali Ndume.

But the belief is that the Senate might have thrown out the request because the executive arm of government has refused to make any commitment on when funds will be disbursed for the constituency projects that are critical to all members of the National Assembly.

The presidency and Director General of the Debt Management Office (DMO), Dr. Abraham Nwankwo, however, promptly defended the external borrowing programme, stating that most of the funds would be used to address critical infrastructure gaps in the country and fast-track its march towards economic diversification.

The Senate, which appeared to have an axe to grind with the president, also rejected the list of ambassadorial nominees he sent to the upper chamber a fortnight ago.

After rejecting the list twice through a voice vote, Senate President Bukola Saraki seemed to feel that rejecting both requests from the president in one day would be viewed as an act of bad faith. Hence, he overruled his colleagues using his gavel, and consequently referred the list of the nominees to the Senate Committee on Foreign Affairs for screening.

Whereas the president’s request for external borrowing had been slated for consideration yesterday, it was a shocked audience that watched the Senate reject the motion by Ndume for its consideration.

The rejection prompted Saraki to subject the request to a voice vote for a second time and again it was rejected, following which it was thrown out.

No reason was given for the rejection at the plenary, but Ndume, while briefing newsmen thereafter, said the request was rejected on three technical grounds.

According to him, the rejection was caused by the sloppiness on the part of the executive, explaining that whereas the president had said in his letter that details of the borrowing plan were attached to his letter, it was not attached after all.

The president had in the introductory paragraph of his letter said: “I wish to refer to the above subject and to submit the attached draft of the federal government 2016-2018 External Borrowing (Rolling) Plan for the consideration and early approval by the National Assembly to ensure prompt implementation of the projects.”

However, Ndume said the “attached draft” of the borrowing plan, which the president said he was submitting along with the letter, was not submitted as stated.

The second reason given by Ndume for the rejection was the absence of details on the borrowing plan, which he said ought to have included “when” and “how” the loans would be obtained.

Ndume also said the Senate rejected the request because the president wanted an anticipatory approval for the loans, which he said the Senate lacked the power to do.

The president’s request for anticipatory approval by the Senate was contained in the last paragraph of his letter.

The president stated: “Given the emergency nature of these facilities and the need to consolidate the peace and return the region to normalcy and considering the time it will take to get National Assembly’s approvals, it has become inevitable to request for the NASS’ leadership approval, pending the consideration and approval of the 2016-2018 borrowing plan by the National Assembly to enable us disburse these funds immediately.”

However, Ndume who said he was shocked by the rejection, said despite the observations, the issues would be looked into and the borrowing plan would be re-presented to avoid throwing “the baby away with bath water”.

He said perhaps the story would have been different if he had a premonition ahead of the presentation, adding that it would have prompted him to lobby his colleagues.

Buhari on Tuesday, October 25, sought the approval of the National Assembly on the $29.9 billion external loan, which translates to over N9 trillion.

The president in the letter had indicated that the $29.96 billion would be for proposed project and programme loans of $11.274 billion, $10.686 billion for special national infrastructure projects, Eurobonds of $4.5 billion, and federal government budget support of $3.5 billion.

Some of the funds from the external borrowing plan would be deployed to emergency projects in the North-east, particularly following the recent outbreak of polio after the de-listing of Nigeria from polio endemic countries.

Enang: Executive to Provide Details

But in his reaction to the rejection of the president’s request, the Senior Special Assistant to the President on National Assembly Matters, Senator Ita Enang, said yesterday that the presidency had received the news of the “suspension” of the borrowing plan and consequently, the Debt Management Office (DMO), Minister of Budget and Planning, Udoma Udo Udoma, and his Finance counterpart, Kemi Adeosun, had begun to gather the information needed by the Senate for the approval process.

He stressed that the executive arm of government was not at war with the upper chamber, and that the presidency would engage the Senate by providing all the needed documents and materials for the approval of the loans.

Senator Enang said: “We are not in dispute with the Distinguished Senate. There is certain information which will enable them to consider in detail and appropriately approve the request of Mr. President.

“So we are collating that information, the Budget Office of the Federation, the Debt Management Office, the Minister of Budget and National Planning, Minister of Finance and the economic team; they are collating the information so that it can be submitted to the Senate to enable them take appropriate decision.”

DMO Defends Foreign Loans

However, just before the Senate threw out the three-year external borrowing plan, the Director General of the DMO yesterday provided further insight into the proposed foreign loans.

Speaking on Channels Television’s current affairs programme, Sunrise Daily, Nwankwo explained that the loans would help in addressing the biting infrastructure deficit in the country.

“When you are in this kind of economic situation, you have to decide where you want to start addressing the problem. You then come to the conclusion that the most critical point to start is to deal with the infrastructure problem.

“If you deal with infrastructure problem, the cost of power will be lower, the cost of transportation will be lower, and the cost of most other services will be lower,” he said.

According to him, one of the features of the proposed borrowing plan is the low concessionary nature of most of the loans, with an average interest rate of 1.5 per cent.

This arrangement, he explained, differs from previous loan arrangements with the Paris Club of creditors, which came with floating interest rates as high as 18 per cent.

He also explained that the facilities would help to revive infrastructure like the railways which would ease the movement of heavy goods across the country.

Tackling infrastructure deficit, he argued, would force down the cost of goods and services in the long run, explaining that the development would have a significant impact on price levels in the economy.

“That impacts the economy by bringing down the general price level, (they call it the consumer price index, which is a classical measure of the price level and the rate of inflation.)

“When you do this, the Central Bank of Nigeria will set the monetary policy rate low, because all over the world, the central bank knows it has to keep the monetary policy rate high enough to catch up with the inflation rate, otherwise we will be talking of negative real rate of interest which destroys the economy.

“So the way to go about it is that you have adequate infrastructure — power, road, transportation, ICT. All these make the cost of production in the economy much lower and when this happens, the cost of goods and services will be lower and then inflation will start coming down.

“And if inflation comes down, the monetary policy rate will be lower and this will translate to a lower lending rate. That is the sequence,” Nwankwo explained.

He also dismissed the misconception that the debt sustainability report released by his agency last week had advised the federal government not to borrow in excess of $22 billion over the three-year period, stating that this was misrepresented by a newspaper report (not THISDAY).

He said what the debt sustainability report published by the DMO said was that the government should not borrow more than $22 billion per annum, thus giving it sufficient headroom for the medium-term $29.96 billion external borrowing plan.

Speaker, Gbajabiamila Lobby Lawmakers

However, it is not just the Senate where the president’s external borrowing plan was expected to hit a brick wall, as the Speaker of the House of Representatives, Hon. Yakubu Dogara, and Majority Leader, Hon. Femi Gbajabiamila, THISDAY learnt, had commenced lobbying other members of the House on the borrowing plan.

Accordingly, the two principal officers are scheduled to hold a meeting with the lawmakers of the Peoples Democratic Party (PDP) and the All Progressives Congress (APC) Caucuses today, to appeal for the approval of the request.

THISDAY exclusively reported last week that there would be stiff resistance to Buhari’s request, as lawmakers had insisted they would only entertain it if a commitment is made by the presidency to fund their zonal intervention projects, better known as constituency projects.

The opposition has stalled the debate on the external borrowing plan on the floor of the House of Representatives.

It was reliably gathered that Dogara and Gbajabiamila were yet to secure a commitment from the presidency for funding of the lawmakers constituency projects.

The duo met with Adeosun, Udoma and the Director General of the Budget Office, Mr. Ben Akabueze, last Thursday to intimate them of the building resistance to the executive’s request on the borrowing plan.

Adeosun and Udoma were expected to revert to Dogara and Gbajabiamila after relaying the development to the presidency.

But at the time of filing this report, no commitment had been obtained from the presidency, THISDAY gathered.

Credible sources said that the presidency stubbornly remains indisposed to funding the constituency projects, which lawmakers consider crucial to the fulfillment of their campaign promises to their constituencies.

“The truth is that the president considers the constituency projects to be fraudulent. His SGF (Secretary to the Government of the Federation) and ministers like Fashola are not helping matters. It seems he has been given the impression that he can do without the National Assembly,” a source said.

Another source said it was unlikely that the pleas of Dogara and Gbajabiamila would be listened to, particularly as the Senate has blatantly refused to even debate the request.

“Now that the president has boxed himself into a corner, the Senate Leader and his counterpart in the House would be put on the spot, and be embarrassed.

“Politics is about give and take everywhere in the world. He needs this loan for infrastructure development, yes, but can he get it without legislative approval? No. So how will he now go about it?” another House member asked.

A lawmaker of the APC also told THISDAY that the conditions attached to the loans and other technicalities were yet to be revealed to the lawmakers.

“How can we approve a request that we do not know all the details?” the lawmaker asked.

“I am sure their next action would be propaganda against the National Assembly, but it’s like they are plotting to sell the country. What is the interest rate, what economic policies are we being asked to implement? These are crucial questions that must first be answered,” the lawmaker added.

Senate Picks Holes

Meanwhile, the Senate yesterday also picked holes in the federal government’s N500 billion Social Intervention Programme and warned against mismanagement of the funds allocated to the programme.

Following a motion moved by Ndume, the Senate advised the federal government to re-examine the N500 billion intervention programme and avoid the failure of similar schemes in the past by incorporating manual registration of beneficiaries from all wards and local governments in the country.

It also tasked the government to present a clear framework that is devoid of the marginalisation of any segment of Nigeria and equally present a framework for the project to the National Assembly for passage.

The Senate also asked the federal government to ensure that the implementation of the programme is robust enough to serve the interests of the poor for whom it said the programme was conceived, and ensure a channel of accountability and auditing is created in the course of implementing the programme.

Ndume, in his motion, expressed concern that the programme “is being carried out in the same manner” as the other failed social intervention funds like the Subsidy Reinvestment and Empowerment Programme (SURE-P), without a proper framework which led to their failure.

He also said that given the recent petitions and complaints emanating from various constituencies over the programme, “this money will not be well spent, nor will it achieve any major benefits for the economy despite the good intentions of government because of the way its being structured”.

Also yesterday, the president sought Senate’s confirmation of the re-appointment of the Managing Director of National Deposit Insurance Corporation (NDIC), Umaru Ibrahim, for another term of five years.