President Muhammadu Buhari wants the Senate to approve the borrowing of $3 billion which he said would be used to refinance the country’s maturing debts.

This was contained in a letter read by Bukola Saraki, Senate President, during Tuesday’s plenary.

Buhari also requested the legislators to approve the issuance of a $2.5 billion Eurobond or Diaspora bond in the International Capital Market, to be used to fund the 2017 budget deficit and finance ongoing critical projects, such as the Mambilla hydro-power project.

“The Senate may wish to know that in order to implement the external borrowings approved by National Assembly in the 2017 appropriation act, the FGN issued $300 million diaspora fund in the International Capital Market, ICM in June 2017,” the letter read in part.

“The balance of the 2017 external borrowing in the sum of $3.2 billion is planned to be partially sourced in the ICM of $2.5 billion through Eurobonds or a combination of Eurobonds and Diaspora bonds, while $700 billion is proposed to be raised from multilateral sources.

“It should be noted that intention is to issue the Eurobonds first with the objective of raising all the funds through Eurobonds and Diaspora bonds will only be issued when the full amount cannot be raised through Eurobonds.

“The Senate may wish to know that the proceeds of the proposed issuance of Eurobonds and Diaspora bonds in the ICM will be used to finance the deficit of the 2017 appropriation act and provide funding for capital projects in the budget.

“The projects include the Mambilla hydro-power project, construction of the second runway of the Nnamdi Azikwe International Airport, counterpart funding of rail projects and construction of Bonny road with a bridge across Opobo channel.”

Buhari’s letter also informed the legislators that “the FGN seeks to source $3 billion through issuance of Eurobonds to the ICM and or loan syndication by banks” in order to enable it “reduce debt service levels, and …  substitute maturing domestic debts with less expensive long term external debts”.

“It is important to note that the proposed sourcing of $3billion from external sources to refinance maturing domestic debts will not lead to an increase in public debt profile because debt already exist,” the letter read.

“Rather, the substitution of domestic debts with relatively cheaper and long term external debts will lead to a significant decrease in debt service cost.

“This will also achieve more stability in the debt stock while also creating more borrowing space in the domestic market for the private sector.

“The Senate will recall that in the 2017 appropriation act, debt service had 1.66 trillion representing 32.73% of the FGN’s total expenditure which makes it important to urgent steps to reduce debt service cost,” the letter read.

Last week, Kemi Adeosun, the Minister of Finance appeared before the Senate Joint Committee on Appropriation and Finance, where, among other things, she said that some capital projects captured in the 2017 budget could not be funded due to inability to access foreign loans.