Nigeria’s former President (199-2007), Chief Olusegun Obasanjo, has questioned recent requests by the Federal Government to source for fresh loans, saying borrowing to accumulate debt for the next generation is criminal.
THEWILL reports that President Buhari had requested the Senate to approve sovereign loans of $4.054bn and €710million as well as grant components of $125m for the proposed projects.
According to the letter by the President, the sovereign loans will be sourced 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).
The Presidency had on Saturday in a statement issued by Senior Special Assistant to the President on Median and Publicity, Garba Shehu, defended its external borrowing plan by listing a total of 15 projects, spread across the six geo-political zones of the country, to be financed with more than $4 billion from multilateral institutions, under the 2018-2021 medium term (rolling) external borrowing plan.
The Presidency also said, Buhari’s request to the Senate listed 15 proposed pipeline projects, the objectives, the implementation period, benefiting States, as well as the
Reacting to the proposed loan request, Obasanjo while speaking to Channels Television on the sidelines of an event in South Africa, Obasanjo noted that if the existing debt is left unserviced or unpaid, it might become a problem for successive administrations.
While noting that borrowing is not a problem, the former Nigerian leader stated that what could be a problem would be what one is borrowing for and 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?
“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?”, he said.
Obasanjo recalled that during his tenure in 1999, the country was spending $3.5 billion to service debts that kept on increasing.
“When I came into government as elected President, we were spending $3.5 billion to service debts. Even with that, our quantum of debts was not going down”, he said.
Nigeria’s debts have continued to rise as the Federal Government seeks foreign loans to deliver key infrastructural projects.
In July, the national assembly approved the sums of $8.3 billion and €490 million loans contained in the initial 2018-2020 borrowing plan.
Culled: THEWILL