A Non-Governmental Organisation specialising in public debt and social welfare, Social Action, has condemned the Federal Government’s plan to borrow $7.8bn to finance the budget deficit of N2.2tn for this year.
In a statement made available by the Abuja Head of Social Action, Vivian Bellonwu-Okafor, the NGO accused the Federal Government of embracing debt again, while ignoring all well-meaning ideas put forward towards lifting the country from economic doldrums.
Bellonwu-Okafor said, “According to its recently released Medium Term Expenditure Framework and Fiscal Strategy document, the Federal Government is set to borrow $7.8bn to finance the budget deficit of N2.2tn. This staggering sum will bring Nigeria’s debt profile to N14.8tn ($67.6bn), a 17.5 per cent rise from its December 2015 portfolio.
“In the said document, the Debt Management Office stated that ‘Nigeria is currently under severe revenue pressure arising from a volatile macro-economic environment and uncertain global economic outlook, which are due to the structural collapse in the international price of crude oil’.
“What indeed can be farther than the truth? Nigeria had in the hey days of oil boom established mechanisms, including the Excess Crude Account and the Sovereign Wealth Fund, the essence of which was to shield the country from the eventuality of such shocks.
“These fall-back instruments were, however, in most ominous circumstances liquidated to the point of near carcass as they are today. These fiscal rascality and sleaze were among the top elements that in reality exposed Nigeria to the eventualities of oil price slump.”
Bellonwu-Okafor said after the country had laboriously and controversially exited the Paris Club debts, successive administrations had continued to borrow huge sums of money that were never deployed to the benefit of Nigerians.
On government’s current borrowing plan, she said, “The so-called Borrowing Plan 2016-2019 as put forward by the Ministry of Finance in conjunction with the DMO is shallow, vague and does not make effective room for monitoring as it does not definitively tie credit facility to any specific measurable project.
“This is contrary to the provisions of Section 41 (1) of the Fiscal Responsibility Act, 2007. The borrowing plan, as it is, will frustrate any oversight effort by the legislature or monitoring by citizens or civic groups.
“We wish to reiterate that in place of acquiring more vague loans, government should put in place mechanisms to investigate and recover the several past failed loans but of which Nigeria is repaying in debt servicing nevertheless; plug leakages, which still abound in the system, and adopt strict fiscal discipline.”
She also urged the government to put in place policies and frameworks to activate other sectors of the economy, including agriculture, manufacturing, mining and tourism.
Bellonwu-Okafor added that significant revenues that had been made from recoveries of looted funds as well as the Treasury Single Account should be utilised in a manner that would drastically reduce, if not totally eliminate, the need for borrowing.
Social Action also urged the government to do everything possible to keep the country as a whole, including the component states, away from indebtedness in order for it to have a genuine and sustainable growth and development.