Nigeria's Senate deals blow to President Muhammadu Buhari's borrowing plan

PUBLISHED: Tue, 01 Nov 2016 14:37:09 GMT

ABUJA (Reuters) – Nigeria’s Senate dealt an unexpected blow to President Muhammadu Buhari on Tuesday by rejecting his plan to borrow $30 billion abroad for infrastructure projects and budget support until 2018.

Senators threw out the plan, introduced last week, without debate. When a surprised Senate President Bukola Saraki held a second vote, most senators shouted again “Nay”.

Buhari’s borrowing plans had included the sale of Eurobonds worth $4.5 billion and planned budget support of $3.5 billion.

The shock vote undermines the president’s authority as he tries to lift the OPEC country out of its first recession in more than 20 years, triggered by low global oil prices. Crude oil sales account for about two-thirds of government revenue.

Some lawmakers, including from Buhari’s ruling All Progressives Congress (APC), have objected to government plans to sell oil and other assets to raise badly needed hard currency.

Buhari had already sent a draft budget for 2017 to parliament for approval, detailing plans to spend a record 6.866 trillion naira ($22.55 billion).

The planned spending is up from this year’s 6.06 trillion naira budget and seeks to stimulate growth by funding infrastructure development to increase manufacturing, create jobs and reduce costly imports.

The government has held talks for months with the World Bank, China and other institutions to fund a 2016 budget deficit of 2.2 trillion naira but so far only the African Development Bank has publicly confirmed a planned loan of $1 billion.

Nigeria also wants to sell $1 billion in Eurobonds by the end of the year.

($1 = 304.5000 naira)

(Reporting by Camillus Eboh; Editing by Mark Trevelyan; Writing by Ulf Laessing; Editing by Larry King)

Sign Up for Our Newsletter Daily Update
Get the best of CNBC Africa sent straight to your inbox with breaking business news, insights and updates from experts across the continent.
Get this delivered to your inbox, and more info about about our products and services. By signing up for newsletters, you are agreeing to our Terms of Use and Privacy Policy.