By Bayo Bernard, Business Editor
Latest Borrowing Pushes Total Debt Stocks to N35 trn
Lagos To Borrow N25bn Too
The time worn anecdote that he goes borrowing, goes sorrowing appears to explain the response of many Nigerians of plans by the President Muhammadu Buhari administration to borrow over $4 billion to fund “emergency needs.”
Buhari, on Tuesday, wrote a letter to the National Assembly seeking its approval to borrow over $4 billion and €710 million loan from bilateral and multilateral organisations to fund the deficit in the 2021 budget.
The president’s request, which was read on the floor of the Senate by Ahmad Lawan, Senate President, also coincided with a plan by the Lagos State Government to borrow N25 billion. The Centre of Excellence, as the state is widely known, is the biggest sub-national debtor in the country with debt totaling N218 billion.
The president, in a letter to the Senate, said the loan request is an addendum to the 2018-2020 borrowing plan, adding that the loan will be used for “critical projects.”
Buhari said in the letter that “I write on the above subject and submit the attached addendum to the proposed 2018-2020 external rolling borrowing plan for the consideration and concurrent approval of the senate for the same to become effective.
“The distinguished senate president may recall that u submitted a request on 2018-2020 borrowing plan for the approval of the senate in May 2021.
“However, in view of other emerging needs and to ensure that all critical projects approved by FEC as of June 2021 are incorporated, I hereby forward an addendum to the proposed borrowing plan.
The president gives details of where the loan is expected to come from.
“The projects listed in the external borrowing plan are to be financed through sovereign loans from the World Bank, French Development Agency, EXIM Bank and IFAD in the total sum of $4,054,476,863 and €710 million and grant components of $125 million,” Buhari said.
His explanation seems not to have assuaged the feelings of many Nigerians who said borrowing under his administration has become too high.
This assertion may not be far from the truth considering that the administration has borrowed more that N20 trillion since Buhari took power from Goodluck Jonathan in 2015.
If the National Assembly goes ahead to approve the new loan request the nation’s total debt stock would have risen to N35 trillion, the highest in 10 years.
This is definitely not a cheery news for many Nigerians, including the Centre for Social Justice, CSJ which said government borrowing has not met fiscal discipline and transparency. The CJS said the fact that the nation’s debt has ballooned under the administration is very worrisome.
Eze Onyekpere, CSJ Director while relying on figures from the Debt Management Office, DMO said the nation’s debt by the time Buhari came to office stood at N12,603 trillion in 2015.
It rose to N17.360 trillion in 2016, and N21.725 trillion in 2017. In 2018, 2019 and 2020, public debt stood at N24.387 trillion, N27.401 trillion, and N32.915 trillion, respectively, Onyekpere said.
In June, the Peoples Democratic Party Governors Forum, PDPGF said after its in Uyo, Akwa Ibom State, that the government has borrowed more without more to show in terms of infrastructure and development. Condemning the rising debt profile of the country, the opposition party said 80 per cent of the loans are being used to service debts.
The Forum had also slammed the administration for borrowing huge sums from the CBN through the Ways and Means window.
A communiqué signed by its Chairman, Governor Aminu Tambuwal of Sokoto state said the administration is mortgaging the future of the country, and as such “The PDP frowns at the rising and seemingly uncontrollable debt profile of Nigeria with over 80 per cent of normal Appropriation spent on debt servicing.
“All the gains of the PDP government under Chief Olusegun Obasanjo, where Nigeria exited its foreign debt obligations have been destroyed. Borrowing for the NTA (Nigeria Television Authority) is scandalous.
“Money should only be borrowed for productive purposes as Nigeria’s current debt of over N36tn is becoming clearly unsustainable relative to our earnings and GDP.
“We should not saddle the incoming generation with an undue debt burden. The borrowing spree of the APC administration, if unchecked, will certainly lead Nigeria to avoidable bankruptcy
“A situation where the CBN creates money, decides how much of it will spend, on what to spend it without any form of control or supervision, is patently subversive of our constitutional order,” the communique said.
The government, in its response to the complaints, said the only way to augment revenue shortfalls is to borrow.
“Our assessment is that we need to borrow to build our major infrastructure. We just need to make sure that when we borrow, we are applying the borrowing to specific major infrastructure that will enhance the business environment in this country”, Zainab Ahmed, the Minister of Finance and Planning said recently.
Buhari’s request for a fresh loan 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.
