President Muhammadu Buhari last week wrote to the National Assembly, asking the lawmakers to grant him permission to borrow another $4 billion and €710 million loan from bilateral and multilateral organisations to fund the deficit in the 2021 budget. In the letter to the Senate, he said the loan request is an addendum to the 2018-2020 borrowing plan. He also asked the lawmakers to approve grant components of $125 million.
According to him, the need to borrow more funds is to meet “emerging needs” of some “critical projects”, adding that the loans when obtained will stimulate the economy and create job opportunities.
President Buhari’s latest loan request comes barely two months after the National Assembly approved his earlier request to borrow $8.3 billion and €490 million loans contained in the initial 2018-2020 borrowing plan.
Nigeria’s external debt stock could hit over $36 billion if the National Assembly approves Buhari’s new borrowing request and this is injurious for our current fragile economy. It is something all patriotic Nigerians should be worried about.
More so, Buhari has less than two years to leave office yet he is still borrowing. He is not concerned about the current huge debt profile put at N35,47 trillion which is unsustainable despite the country’s debt-to-Gross Domestic Product (GDP) ratio put at 35 percent which seems comfortable.
Economic experts including the chairman of the Presidential Economic Advisory Council (PEAC), Professor Doyin Salami
have kicked against the reckless borrowing of the Buhari government because of the looming danger it poses to the economy and future of the country.
The truth be told, while borrowing is required to support the economy, sustainability, transparency and repayment plans are crucial. Nigeria is not the only country that obtain loans to finance its critical infrastructures but how well has previous loans served the interest of the country? What has the government been doing with the loans? More worrisome also is the fact that we are using over 70 percent of generated income to service these debts which is not a good thing.
We recall that President Obasanjo during his tenure had to launch a relentless debt relief campaigned for Nigeria. As at that time, 2004, the nation’s external debt stood at $36 billion, with the country spending more on interest payments than on health care and education, put together. The debt relief effort yielded fruit on June 29, 2005, when the Paris Club and the federal government agreed on a debt relief package of US$18 billion with the country paying off the balance to free the nation.
The Umaru Musa Yar’Adua and Goodluck Jonathan administration did not embark on such a borrowing spree like Buhari is doing. It was simple, they had people who were in firm control of the nation’s economy and were deliberate in their programmes and polices as well as developmental agenda for the country.
What we are seeing now is a clear departure from the past. There is a disconnect between managers of the economy and what is the current reality of things. It is also to be noted that the Buhari’s government has violated important financial laws in the country like the Fiscal Responsibility Act, and the CBN Act 2007.
For instance, in 2020, the federal government exceeded the fiscal borrowing threshold as stipulated in the fiscal act and the minister of finance, Zainab Ahmed, admitted it on the grounds that COVID-19 was good enough reason to breach the act. That was a cover up excuse for the incompetence shown by the government.
We urge Buhari to rejig his economic team and step on the brakes by stopping his obsession for borrowing. He should rather concentrate on creating channels for increased internal revenue by thinking out of the box and save the country from a life long debt that will compound her woes.