October 25, 2016 / 5:31 PM / 3 years ago

Nigeria's Buhari asks parliament to approve $30 billion of borrowing

ABUJA (Reuters) - Nigerian President Muhammadu Buhari has asked parliament to approve $30 billion of foreign borrowing to fund planned infrastructure projects until 2018, according to a letter read out to lawmakers on Tuesday.

Nigeria, an OPEC member, slipped into recession for the first time in more than 20 years in the second quarter largely due to low global oil prices. Crude oil sales account for about two-thirds of government revenue.

The proposed borrowing includes the sale of Eurobonds worth $4.5 billion and a planned budget support of $3.5 billion, according to the letter from Buhari read out by the Senate President and the speaker of the House of Representatives.

“The projects cut across all sectors with special emphasis on infrastructure, agriculture, health, education, water supply, growth and employment generation, poverty reduction,” Buhari said in the letter.

“It has become necessary to resort to prudent external borrowing to bridge the financing gap.”

The borrowing was for the period until 2018, he added.

Buhari has already sent a draft budget for 2017 to parliament for approval. It lays out planned spending of a record 6.866 trillion naira ($22.55 billion) to help pull Africa’s biggest economy out of recession.

The spending increase from 6.06 trillion naira this year aims 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 although as of Friday no bank to arrange the issue had been appointed.

Problems stemming from cheap oil have been exacerbated by militant attacks on energy facilities that have cut crude production, which was 2.1 million barrels per day (bpd) at the start of 2016, by 700,000 bpd.

In an effort to contain militancy in the Niger Delta oil hub, Buhari also asked lawmakers to spend another 35 billion naira this year on an amnesty plan for former fighters.

Cash salaries had been paid to ex-militants only until May because the amnesty’s original budget of 20 billion naira had fallen short. “This is creating a lot of restiveness and compounding the security challenge in the Niger Delta,” Buhari said in a letter.

Oil output has improved to 1.9 million bpd, the petroleum ministry said in a tweet late on Monday, without giving details.

Nigeria’s excess crude account, a rainy day fund, stood at $2.4 billion as of October, the government said in a statement, in line with previously reported figures.

($1 = 304.5000 naira)

Reporting by Camillus Eboh; Writing by Ulf Laessing; Editing by Catherine Evans

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