Former President Chief Olusegun Obasanjo has slammed the Federal Government’s proposal to seek more loans, calling it criminal to borrow to accumulate debt for future generations.
In an addition to the 2018-2020 borrowing plan, President Muhammadu Buhari wrote to the National Assembly, requesting authorisation to borrow new sums totaling $4,054,476,863 and €710 million.
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In the letter, the President highlighted that there was a need to raise more cash for some “important projects” due to “growing needs,” while also requesting that the parliament approve grant components totaling $125 million.
The request was made in a letter read aloud on the Senate floor by Senate President Ahmad Lawan on Tuesday.
The National Assembly authorized the $8.3 billion and €490 million loans included in the initial borrowing plan for 2018-2020 in July. On the sidelines of an event in South Africa, Chief Obasanjo told Channels Television that if the existing debt was left unserviced or underpaid, it could become a problem for future administrations.
Borrowing is not a problem, according to Obasanjo, but what is a problem is what the country is borrowing for and the plan or capacity to repay it. “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?
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“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?” Obasanjo queried.
He recalled that during his tenure in 1999, the country was spending $3.5 billion to service debts that kept on increasing.
He said: “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.”
Nigeria’s debts have risen as the government seeks international financing to complete critical infrastructure projects.
Nigerians have expressed their displeasure with the current government’s continued borrowing, which they regard as a risk to the country’s future. The Debt Management Office, DMO, has estimated the country’s entire debt stock at N35.5 trillion, with domestic debt accounting for N21 trillion.
Thank you, it was a pleasure to read and draw certain conclusions for myself.