Buhari, stop the reckless borrowing - Punch Newspapers
The most widely read newspaper in Nigeria
24 September 2021UNFAZED by public dismay and the admonition of experts, the President, Major General Muhammadu Buhari (retd.), with the enthusiastic support of the National Assembly, is plunging Nigeria deeper into debt at a reckless rate. His latest lunge for external borrowing hit a benumbed public, via a request to the pliant parliament for approval to borrow another $4.05 billion and €710 million in external loans. Ostensibly, the loans are for infrastructure, health, education, agriculture, human capital development and COVID-19 response projects. Amid reports of debt servicing gulping almost all revenues, lack of accountability, revenue leakages, and limited impact of past borrowings, the headlong debt acquisition should be halted.
Unproductive national debt lowers national savings and income. It ignites higher interest payments, leading to large tax hikes and spending cuts, decreases the ability to respond to problems and greater risk of a fiscal crisis. Instead of binge borrowing, the Buhari regime can reduce the cost of governance, drastically plug revenue leakages, widely broaden the tax net, and sell off loss-making moribund state-owned enterprises.
Experts say a large debt encourages inflation, and if inflation is high, the debt will be serviced, and ultimately, paid off with cheaper naira. Equally exasperating is the vigorous support of the parliament for his debt addiction. Lawmakers treacherously fail to subject loan approval requests to rigorous scrutiny or caution. They do not exercise effective oversight over revenue-generating agencies despite reported massive leakages and unremitted income. headtopics.com
Between them, they are saddling current and future generations with unsustainable debts. Buhari cites his current request to borrow $4.05 billion and €710 from multilateral and private lenders as an addendum to the approved 2018-2021 borrowing plan. He said the funds would finance “key projects in each of the six geo-political zones,” including his pet project, the Kano-Niger Republic railway that is expected to gulp $1.96 billion, Lagos-Ibadan rail line modernisation, Kaduna Bus Rapid Transport, and hybrid solar power infrastructure for the NASS complex.
Within days, rather than prepare to scrutinise the request, the Senate, through the chair of its committee on media and public affairs, Ajibola Basiru, was defending the loans and dismissing public apprehension. He argued that the loans were not new and were justified since they would fund “critical infrastructure and prepare our country for the future.” This assertion and Buhari’s premise of job creation are hotly disputed. Indeed, many cannot see any significant benefit from the debts taken so far. Simultaneously, the government is raising another $4 billion via the Eurobond issue.
Meanwhile, the debts are piling up with alarming rapidity while public revenues are becoming increasingly precarious. The Director-General of the Debt Management Office, Patience Oniha, said total public debts rose from N32.91 trillion in December 2020 to N35.46 trillion by June, this year. Buhari inherited a $10.31 billion external debt in 2015 and by March 31, this year, had raised it to $32.85 billion. In naira, the external debt was 38.60 percent by June.
As this newspaper and leading economists have repeatedly argued, debts can be useful when taken with caution and applied judiciously to fund critical infrastructure; applied to projects that can generate revenue to repay or used in the short term to stimulate a flagging economy and revive productive, job-creating and export-boosting activities. Borrowing to fund consumption and bureaucracy, however, is particularly unwise. headtopics.com
Like the World Bank/IMF, the chairman of Buhari’s Presidential Economic Advisory Council, Doyin Salami, has again deplored the current debt profile as unsustainable. The government’s previous comforting debt-to-GDP ratio has spiked to 35 percent; the real marker of imminent disaster lies in the debt service-to-revenue ratio that averaged 97.7 percent from January to May this year. Borrowing to pay salaries, run an oversized, unproductive bureaucracy and maintain parasitic public officials in luxury is courting bankruptcy. Debt servicing has risen beyond the targets, hitting N3.01 trillion January-May, which is 53.8 per cent of the total projected for fiscal 2021.
Buhari must change course before he drives Nigeria over the precipice. The NASS should be responsible. First, deficits must be slashed. Recklessly, between 2018 and June 2021, the government earned N12.79 trillion but spent N28.14 trillion, leaving a deficit of N15.35 trillion; expenditure is too high and should be drastically reduced by shutting down redundant agencies, and stop creating new cost centres such as agencies, universities, and polytechnics.Read more: The Punch Newspapers »
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Please 🙏 sir We use our hero's past blood and suffering beg... I won't be surprised to hear that Buhari didn't even know about most of these loans. These loans are d handiwork of Malami and Amaechi most times. They are taking advantage of Buhari's dementia, these 2 musketeers might tell him it is for fertilizer and a rail to Niger Republic.
Una dey waste una time this man will borrow again before the end of this year and lawan will read letter then approve how can one stop when one doesn't know simple mathematics ,this is why restructuring is the only way to go so that the likes of buhari will never be HOS It’s called conspiracy of the ruling class!
The blame should be on the National Assembly. Reason i keep hammering we don’t need such useless Assembly. We are better off! If you want to stop the reckless borrowing, then take the lenders to International court for reckless lending leading to state capture! NGRSenate channelstv vonderleyen RepBarbaraLee ewarren UrugwiroVillage _AfricanUnion Africa
Buhari yé yá owó niya-kuya YourYorubaHumanTranslator The funny thing is the way they are quick to approve it.
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