The Senate on Thursday approved a total of $7.109bn for the federal and state governments under the 2012-2014 Medium Term External Borrowing Plan.
While the Federal Government got approval for $4.846bn, 23 states got $2.263bn as their share of the borrowing plan to be funded by the World Bank, African Development Bank, China Exim Bank, French Development Agency and the Islamic Development Bank.
However, what was approved by the Senate was $791m less than what was earlier forwarded to the National Assembly by President Goodluck Jonathan.
The Senate also urged the Federal Government to forward a request on behalf of Lagos State for a borrowing plan of $600m from the World Bank.
It reached the decision on Thursday while approving the recommendations of its Joint Committee on Finance and Local and Foreign Debts on the proposed pipeline projects under the Medium Term External Borrowing Plan (2012-2014).
It, however, rejected the $56.1m loan request from Kaduna State, following the state’s withdrawal of interest in the projects earlier listed under the borrowing plan.
Following the recommendations of the committee, the Senate approved the projects tied to the loans by the federal and state governments and their agencies, but deferred the projects for which the amount for on-lending were not stated.
The committee noted that Lagos State had a subsisting understanding with the World Bank for a three-year borrowing framework in the sum of $600m with a yearly disbursement of $200m, which commenced in the 2012 fiscal year.
It said, “Based on this, the Lagos State Government has built in as revenue the next tranche of $200m in the 2013 budget.
“The Senate do advise the Federal Government to forward a request for Lagos State in order to avert imminent crisis in the implementation of the 2013 budget.”
Explaining the rejection of Kaduna State’s request, the committee noted that the state was no longer interested in borrowing under the multi-state bilingual education programme being funded by the Islamic Development Bank and the National Urban Water Sector Reforms of the French Development Agency in the sum of $56.1m.
It also observed that the Federal Government’s external debt profile was at a level that it could accommodate more borrowings without exceeding the international limit of 40 per cent debt to Gross Domestic Product ratio and the country’s limit of 25 per cent.
“Some of the borrowing states have reasonably justified their borrowings and have acceptable debt sustainability levels and, therefore, could borrow,” the committee recommended.
It noted that some of the projects’ exact amounts for on-lending to the states were not indicated in the loan schedule submitted to the Senate by the President, making it difficult to appreciably assess the projects.
It said six state commissioners of Finance failed to appear before the committee to defend their proposals; while there were discrepancies in the projects states applied for and those which the Federal Ministry of Finance allotted to them.