Despite a copious explanation offered by the Presidency on how it plans to deploy the latest round of $4 billion loans it is asking the National Assembly approval for, former President Olusegun Obasanjo, like many others, is not impressed.
He insists it is criminal to take loans that future generation will have to pay.
Speaking on Channels Television on the sidelines of meeting in South Africa, warned that the mounting debts of the country if left unserviced or unpaid, it might become a problem for successive administrations.
He reiterated the oft-repeated position that though borrowing is not an issue, doing so without tailoring to developmental projects, could be a problem without the plan or capacity to pay back.
“But if you are borrowing and accumulating debts for the next generation and the next generation after them, it is criminal. What are you borrowing for?” Obasanjo asked.
“If we are borrowing for recurrent expenditure, it is the height of folly. If we are borrowing for development that can pay for itself, that is understandable. Then the payment, how long will it take to pay itself?”
“If you want to build a commercial house and you go and borrow money, and you have 50 per cent of your own money and you borrow 50 per cent and in five years, you pay the 50 per cent that you borrowed. That is a wise thing to do. But if you have to go and borrow money for you to be able to feed yourself and your family, that is a stupid thing to do.
“So, if we are borrowing for recurrent expenditure, it is the height of foolery. If we are borrowing for development that can pay itself, that is understandable; then how long will it pay itself? But we are borrowing and accumulating debt for the next generation and the next generation after them, it is criminal, to put it mildly. What are we borrowing for?
“When I came into government and was elected President, we were spending $3.5bn to service debt, and even with that, our quantum of debt was not going down.”
Everyday.ng reports that If the National Assembly approves President Muhammadu Buhari’s latest request to borrow, the country’s debt profile may rise to about N38 trillion, if figures from the Debt Management Office (DMO) are anything to go by.
This includes the domestic and external debt of the Federal Government, the 36 state governments and the Federal Capital Territory, FCT.
Public debt stock stood at N35.465 trillion as at June 30, Director-General of the Debt Management Office, DMO, Ms. Patience Oniha, stated last week.
In the letter from President Buhari seeking approval from the National Assembly for new borrowings, dated 24th August, 2021, he explained that the projects listed in the 2018-2021 Federal Government Borrowing Plan are to be financed through sovereign loans from the World Bank, French Development Agency (AFD), China-Exim Bank, International Fund for Agricultural Development (IFAD), Credit Suisse Group and Standard Chartered/China Export and Credit (SINOSURE) in the total sum of USD4,054,476,863.00; Euro 710,000,000.00 and Grant Component of USD125,000,000.00.
At an exchange rate of N500 to the dollar and N645 to the Euro, the new borrowings will come to about N2.5 trillion.
Nigeria’s total public debt stock was N33.107 trillion or USD87.239 billion, as at March 31, 2021.
This indicated a N2.358 trillion rise in the debt stock from the end of the first quarter of the year to the end of the second quarter.
A breakdown of the public debt figure under review indicated that that external debt was N13.711 trillion, representing 38.66 per cent.
On the other hand, domestic debt was N21.754 trillion, representing 61.34 per cent of the total stock.
The Federal Government accounted for N11.828 trillion of the external debt and N17.632 trillion of the domestic debt.
States and the FCT’s external debt stood at N1.883 trillion, with a domestic debt stock of N4.122 trillion.
The breakdown of the external debt showed that the bulk of the debt is owed to multilaterals (World Bank Group and the African Development Bank Group), which accounted for 54.88 per cent.
Under pressure at the weekend, the Presidency gave a list of projects that the fresh $4 billion loan will cover.
