$5bn Loan: Group Backs PDP, Warns Against Rising Debt

By Tosin Olatokunbo

ActionAid Nigeria has warned the Federal Government to desist from obtaining further foreign loans.

The organisation said the country’s rising debt profile should be a serious concern all Nigerians.

The civil rights body stated that the loan will become a burden in the future, difficult to pay back because such loans are used for ostentatious lifestyles of government officials and payment of salaries.

The federal government had on Tuesday requested approval from the National Assembly to obtain $5 billion loan to cushion the effects of the COVID 19 on the economy and fund the deficit in the 2020 Budget.

The major opposition party, the Peoples’ Democratic Party, PDP had earlier warned the federal government from taking further loans, warning that the country is now on a life support because of her bogus loan receipt.

The organisation also warned that loans should not be used for recurrent expenditures including paying of salaries and traveling allowances.

Ene Obi, ANN country director, in a letter to the Senate President, Ahmad Lawal and the Chairman, Senate Committee on Appropriation warned the National Assembly from further worsening the nation’s debt burden.

In the letter titled “Budget Reality: X-Raying the Implication of the Cuts in the 2020 Budget on Key Sectors, Health, Education and Agriculture Amidst COVID-19 Pandemic, the rights body stated that efforts should be made to offset the foreign loan already obtained by the federal government.

It said the country should try to live within its means by cutting allocations to non-critical sectors and more resources channeled to life touching areas such as health, education and agriculture.

According to ANN, “The Nigerian government should enhance its capacity to offset loans before obtaining more of the same. Furthermore, loans should not be used for recurrent expenditures (to pay salaries, traveling allowances, etc).

The allocation to the National Assembly should be reduced and all excesses channeled towards enhancing the health, education and agricultural sectors.

The budget allocations in the 2020 budget to key sectors should not be reduced further in the ongoing budget review, given that they are already very insignificant, falling below the international benchmarks.”

It stated that the fall in crude oil prices is likely to worsen the nation’s financial problems after the devastation of the COVID 19 pandemic.

From all indications “There is an anticipated loss in revenue from oil due to the COVID-19 pandemic, which may render Nigeria incapable of meeting her 2020 revenue targets.

This has necessitated a budget cut.

A budget deficit of N5.36tn is expected to be funded through loans from the IMF, AfDB and other institutions.

It is projected that by 2021, 75 per cent of Nigerian revenue will be channeled towards offsetting debts accrued.

With the dwindling revenue occasioned by falling oil prices, non-remittances, leakages etc, the tendency that borrowing will continue in 2020 to fund the budget is likely.”

The nation’s foreign debt currently stands at over $85 billion.