Nigeria: Nass Roundup – Tinubu’s loan request, single term as president, other stories from representatives

President Tinubu has asked lawmakers to approve borrowing an additional ₦1.7 trillion ($2.209 billion) to finance the 2024 budget.

Tinubu loan request

After a two-week break, members House of Representatives returned to work on Tuesday. Why lawmakers decided to call a recess in the middle of the usually busy third quarter remains a mystery.

To highlight how busy this quarter usually is, three letters from the President were waiting for them when the plenary session began. With less than six weeks left in the year, lawmakers are expected to turn their attention to the 2025 budget, which is expected to arrive soon.

However, after resumption of work, lawmakers received a letter from President Bola Tinubu asking them to approve borrowing an additional ₱1.7 trillion to fund the 2024 budget. The loan, equivalent to approximately $2.209 billion, will be obtained through the issuance of Eurobonds on the open market.

In a letter read by Speaker Abbas Tajudeen, the president outlined three main sources of credit. The first option, he explained, is to raise $2.209 billion by issuing Eurobonds on the International Capital Market (ICM). He noted that “Nigeria is a consistent issuer of ICM, raising $16.92 billion, of which $15.12 billion is still outstanding.”

According to Mr. Tinubu, the second option involves a debut sovereign sukuk of up to $500 million in ICM with credit enhancement from the Islamic Investment and Export Credit Insurance Corporation (ICIEC).

The final option is bridge financing or syndicated loans provided by international bookmakers and joint lead managers.

The President said Citigroup Global Markets Ltd, Goldman Sachs, JP Morgan and Standard Chartered had been appointed through an open competitive tender to advise on the issuance of Eurobonds if necessary. He added that “this option will only be used if, for any reason, the issuance of Eurobonds is delayed due to market conditions and there is an urgent need for funds.”

The question remains: Why is the government seeking a new loan to finance the 2024 budget deficit, which expires on December 31? Does the government plan to extend the capital components of the current budget beyond 2024?

Budget extensions have become the culture under the current administration. The capital component of the 2023 budget is currently being implemented in parallel with the 2023 supplementary budget.

However, the Senate has since approved the loan request.

Also MTEF/FSP

Another letter from the President concerned the Medium Term Expenditure Framework (MTEF) and the Fiscal Strategy Paper (FSP). The MTEF is a three-year rolling plan used as the basis for preparing the annual budget. According to the Fiscal Responsibility Law, the President is required to submit this document to the National Assembly at least four months before the end of the year.

However, in violation of the law, Mr Tinubu presented the plan less than six weeks before the end of the year. In October, the House of Representatives gave him a two-week ultimatum to introduce the MTEF, but the President ignored the deadline.

Section 11(1)(b) of the Act states: “The Federal Government, after consultation with the States, shall, not later than six months from the date of the commencement of this Act, prepare and submit to the National Assembly its consideration of a medium-term expenditure program for the next three financial years and then, no later than four months before the start of the next financial year, ensure the preparation of a medium-term expenditure program for the next three financial years.”

There is no single term for the president

Lawmakers on Thursday unanimously rejected a constitutional amendment bill aimed at eliminating two-term limits for the president and governor.

The bill, sponsored by Ikenga Ugochinyere and others, was rejected by lawmakers before the sponsor could debate it.

Following the rejection, Ugochinyere told reporters he would consider reintroducing the bill.

Concerns about tax bills

Outside the House, lawmakers discussed the four tax bills with Zach Adedeji, Chairman of the Federal Inland Revenue Service (FIRS), and Taiwo Oyedele, Chairman of the Presidential Committee on Budget and Tax Reforms.

The interactive session was organized by the House of Representatives to resolve issues related to the bills.

Messrs Oyedele and Adedeji addressed legislators, emphasizing the need for reform.

“The tax system lacks proper structure. We have outdated laws that we are still amending. We have laws, but we do not comply with them,” he said.

Mr. Oidele continued: “There are about 60 formal tax laws in Nigeria. In contrast, other countries have fewer than 10. The solution to our problems cannot be to impose more taxes. Instead, we should eliminate multiple taxes and maximize collection. No matter how high the official number of taxes, the unofficial ones are even higher.”

The next few weeks will be crucial for the Green Chamber.