The federal government has said it will now raise of N1,594.99 trillion proposed the total sum of borrowing on the 2020 budget from domestic market alone, while abandoning the external market.
In a statement that was issued by the Debt Management Office (DMO) yesterday, the federal government said the conversion from external to domestic is to ensure that the implementation of the 2020 Appropriation Act is not jeopardized by lack of funds.
The DMO had said the country will borrow N1.549 trillion from domestic and international markets to fund its 2020 budget. The FG had planned to borrow N850 billion externally, while N744 billion will be borrowed from the domestic market.
DMO’s DG Patience Oniha also said N150 billion of the required funds will be sourced through the sale of Sukuk bonds. The budget assumes a deficit of 1.52 per cent of the estimated gross domestic product.
“With the COVID-19 Pandemic and its attendant effect on the world economy and the International Capital Market, the Federal Government said it has reappraised its Borrowing Plans and decided that it would be more expedient to raise the N850 billion, earlier approved as External Borrowing, from Domestic Sources,” the DMO said in the statement that was made available to newsmen yesterday.
The debt office explained that the N850 billion is not new or incremental borrowing, rather it is an amendment of the source of borrowing from External to Domestic. With this change, the total New domestic borrowing under the 2020 Appropriation becomes N1,594.99 billion which is the same as the total New Borrowing in the 2020 Appropriation Act.
The 2020 Appropriation Act approved a total of N1,594.99 billion as New Borrowing to part-finance the deficit in the budget. This was made up of N794.99 billion domestic borrowing and N850 billion external borrowing.
According to the DMO, President Muhammadu Buhari forwarded requests to the Senate and House of Representatives to convert the source for raising the N850 billion from external to domestic.
The Senate approved the request on Tuesday, April 28, 2020, while the approval of the House of Representatives is expected.
Upon approval of the request by the House of Representatives, the Debt Management Office will issue FGN Securities in the Domestic Market to raise the N850 billion, thereby providing high-quality investment opportunities for the investing public.