FG to borrow N1.59trn locally to fund Budget 2020

TRACKING___The Federal Government will now borrow N1.59 trillion from the domestic market to fund the Budget 2020, instead of the N794.99 billion earlier contained in the budget.

This follows the conversion of the N850 billion earlier approved for external borrowing in the budget to domestic borrowing.

The Debt Management Office (DMO) explained, yesterday, that the decision was taken in view of effect of the COVID-19 pandemic on the international capital.

The DMO disclosed this in a statement, saying, “The 2020 Appropriation Act approves the N1.594 trillion as New Borrowing to finance the deficit in the budget.

“This was made up of N794.99 billion domestic borrowing and N850 billion external borrowing.

“With a COVID-19 pandemic and attendant effects on the world economy and the international capital market, the Federal Government re-appraised its borrowing plan and decided it will be more expedient to raise the N850 billion earlier approved as external borrowing from domestic sources.

“This conversion from external to domestic is to ensure that the implementation of the 2020 Appropriation Acton is not jeopardised by lack of funds.

“Thus 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 trillion which is the same as the total new borrowing in the 2020 Appropriation Act.

“For compliance with the law, his Excellency, President Muhammadu Buhari, forwarded the request 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 the N850 billion, thereby providing high-quality investment opportunities for the investing public.”