Nigerian Government to Borrow N500 Billion ($1.2bn) from Designated Accounts

Nigerian Government to Borrow N500 Billion ($1.2bn) from Designated Accounts

On Saturday, the Federal Government (FG) approached the leadership of the National Assembly with a proposal of a N500 billion ($1.2 billion) crisis intervention fund that will help cushion the effects of coronavirus in Nigeria.

The Minister of Finance, Budget and National Planning Zainab Ahmed, presented an executive proposal to establish a “N500 billion COVID-19 fund” as part of efforts by the federal government to ease the economic pains that are unfolding as the fight to contain COVID-19 continues.

The federal government is also prioritizing the rehabilitation of healthcare facilities around the country as coronavirus cases keep rising daily.

“Our general view is that this crisis intervention fund is to be utilized to upgrade healthcare facilities as earlier identified. The Federal Government also needs to be in a position to improve healthcare facilities not only in the states but to provide intervention to the states,” Mrs. Ahmed said.

The Minister highlighted some other programmes that the fund will be invested in including special work programmes currently being implemented by the National Directorate of Employment (NDE).

However, it became necessary for the executive to seek the approval of the legislature because funds will be drawn from various special accounts of the government to make up the N500 billion. The government also hopes to make an equalization from grants and donations from corporations, institutions and NGOs.

The Minister asked the lawmakers to approve taking loans from some designated accounts, promising to return to the legislative chamber with a proposed bill in that regard that will define what the fund will be used for.

“We know that there will be a need for the parliament to agree and approve the taking of loans from these special accounts and we will be coming back with a proposed bill in that regard that will define what the fund will be used for,” she said.

In response, the senate president Ahmed Lawan said the emergency health situation in the country has called for the consideration of such loans.

“So, we must work as expeditiously as possible to ensure that we place the request before the National Assembly,” he said.

The senate president also faulted the method of distribution of palliatives aimed at cushioning the effects of economic hardship emanating from coronavirus outbreak. The federal government had early this week, through the office of Humanitarian Affairs, commenced the Social Intervention Programme, distributing N20,000 to some Nigerians identified as poorest across the country.

“I think time has come for us to redefine the implementation of the Social Intervention Programme. Probably going out to communities to give them N20,000 person might not be the best way to go. It is still an effort, but I think we need a better approach that will be more efficient,” Ahmed said.

Over N10 billion has been pledged by individuals and organizations to support the government’s relief effort in Nigeria, and many have questioned the method that the government has adopted in administering its palliatives, raising concerns that donated funds may not be used for the intended purpose.

The federal government’s move to borrow from designated accounts has heightened the suspicion that there is ulterior motive. A reason the national assembly has requested a proposed bill detailing how the fund will be used.

In February, the federal government made a move to borrow N2 trillion from the pension fund as it was seeking funds to implement many of its programmes. The attempt was met with fierce opposition so that it backed down. The pension fund stood at N10 trillion and was a center of interest to the executive as oil revenue dwindled and put the government in economic hardship.

The coronavirus crisis appears to have aggravated the woes of the already broke FG, narrowing its options to funds in designated accounts as external borrowing seems difficult at this time.

Given the circumstances, the Excess Crude Account (ECA) would have come to the rescue. But regular visitation by the government to the account has reduced it to $71.81 million. And with oil price wobbling between $20 and $34 dollars, the Foreign Reserve doesn’t offer any option.

Left with little or no option, the national assembly is likely going to approve FG’s request to invade some designated accounts. The fear remains that it will result in more hardship than the government is trying to alleviate soon after.

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