President Muhammadu Buhari Thursday formally sought the authority of the National Assembly for a fresh foreign borrowings totalling $5.513bn.
In a letter read by Speaker of the House of Representatives, Femi Gbajabiamila at the beginning of Thursday’s plenary, the president said the fund the fund would be used to finance the 2020 budget deficit as well as for the financing of critical projects, and some states of the federation.
The President also presented a revised 2020 Appropriation Bill and 2020-2022 Medium Term Expenditure Framework and Fiscal Strategy Paper.
The National Assembly had recently approved a loan of N850bn for the Federal Government, while another of $22.79bn, which the Senate has already approved, is pending before the House.
The loan request came as it was announced that South Africa was planning Iprojects worth $20.5 billion in sectors such as transport, energy and water as it looks to drive an economic recovery from the coronavirus crisis, a top official in the governing African National Congress (ANC) said on Wednesday.
Paul Mashatile, the ANC’s treasurer general, told a video conference organised by think tank Chatham House that the infrastructure projects would soon be approved by President Cyril Ramaphosa’s cabinet after talks with the private sector and multilateral development banks.
The projects would focus on areas such as railways, ports, energy, information technology, water and sanitation and housing, he added.
Africa’s most industrialised economy was already in recession before the COVID-19 pandemic struck, with the central bank now predicting a 7% gross domestic product contraction this year and some economists forecasting a double-digit budget deficit.
“It is clear that given the scale of the damage to our economy, the post-COVID-19 reconstruction effort will be no mean feat,” Mashatile said.
Enoch Godongwana, who heads the ANC’s economic transformation subcomittee, told the same video conference that the government hoped to stimulate economic demand via the infrastructure programme, drawing on lessons from the 2010 soccer World Cup the country hosted.
“Global trade is going to be subdued, therefore exports will be minimal, we have got to look at how we stimulate demand in our given circumstances,” Godongwana said.
In Kenya the central bank spoke of the urgent need to establish a credit-guarantee program to reduce the risk of lending to small- and mid-sized companies battered by the coronavirus pandemic, according to central bank Governor Patrick Njoroge.
Three in four small businesses in the East African economy have cash to cover only two months of requirements, Njoroge said, citing an April survey. If a guarantee plan isn’t established, “they would die quickly,” he said at a briefing on Thursday following a monetary policy committee decision to retain the signal rate at 7% after four previous consecutive cuts.
“By end June, they’re on the ropes, they’d be gone,” he said. “This is extremely urgent. The time-frame has to be as short as possible.”
