Stakeholders are unsettled over the Federal Government’s plan to borrow a fresh $6.18 Billion (N2.343 Trillion) amid rising debt profile, which may push the country’s debt to about N36 Trillion, with as much as over N25 Trillion of the sum contracted in the last six years of the current administration.
Coming at a time when President Muhammadu Buhari is canvassing for debt relief for the country and other nations in Africa while wooing investors into the country, experts, who spoke with The Guardian yesterday insisted that the country’s growing debt profile should create great concern for Nigerians.
The Director-General of the Debt Management Office (DMO), Ms. Patience Oniha, was, however, quick to correct the impression that the current loan request before the National Assembly was a fresh one, as according to her, it was already approved and captured in the 2021 Appropriation Act already being implemented.
“What we merely did is comply with the DMO Act, which mandates us to seek the approval of the National Assembly for all foreign lending. Of course, the National Assembly had already approved of the borrowing plan as already captured in the 2021 Appropriation Act,” Oniha explained.
She also provided the deployment plan for the funds to be raised. “The proposed new capital raising, in fulfilment of the provisions of Sections 21 and 27 of the Debt Management Office (Establishment, Etc.) Act, 2003, will be deployed to capital projects in various sectors of the economy, including power, transport, agriculture and rural development, education, health and water resources already included in the 2021 Appropriation Act.”
A public finance expert and senior research fellow at the National Institute of Legislative Studies (NILS), Dr. Abraham Terfa, said the request for foreign loan for capital projects is not a bad idea if only the capital projects are well-drafted, initiated, monitored and executed with the growth of the economy at the back of the minds of policymakers. In the absence of this, it will just be a repetition of previous cycles created by the government for mismanagement of funds.
“The purpose of taking up capital projects is to create multiple streams of revenue for the economy, thereby causing a boost and the possibility of clearing previously owed debts. The implication of this foreign loan is that it will cause more accumulation of debts as well as an increase in debt servicing.”