HAMMER

Adedayo Akinwale writes that the National Assembly’s lack of capacity to control excessive borrowing by government executive fuels its unbridled appetite for loans

Following the resumption of the National Assembly after its annual recess, President Muhammadu Buhari’s first request was for the legislative branch to approve a new loan of 2.5 trillion naira despite the current over-indebtedness of 33 trillion naira. nairas.

The request aims to review and approve an external borrowing plan in the amount of approximately N 2.5 trillion to finance projects included in the 2018-2021 borrowing projections.

This new loan request, if approved, will bring the country’s national debt to over 35 trillion naira.

Since 2015, Nigeria’s debt has also grown in double digits year on year, with the largest increase recorded between 2015 and 2016.

According to the Debt Management Bureau (DMO), the stock of public debt stood at 12.603 trillion naira in 2015, 17.360 trillion naira in 2016 and 21.725 trillion naira in 2017. In 2018, 2019 and 2020, the public debt stood at 24 naira. 387 trillion, 27401 trillion naira and 32.915 trillion naira, respectively.

From the above, the largest increase occurred between 2015 and 2016, while between 2015 and 2020, Nigeria’s public debt increased by 161 percent, indicating an annual average increase of 37.74 percent.

Buhari, in a letter to Senate Speaker Dr. Ahmad Lawan, dated August 24, 2021, which was read in plenary last week, explained that the projects listed in the federal government’s 2018-2021 borrowing plan were to be financed by sovereign loans. the World Bank, the French Development Agency (AFD), the Export-Import Bank of China, the International Fund for Agricultural Development (IFAD), Credit Suisse Group and Standard Chartered / China Export and Credit ( SINOSURE).

The president said the amount was $ 4.05 billion, € 710 million and a grant component of $ 125 million. He explained that the money would be used to fund federal and state government projects in key sectors such as infrastructure, health, agriculture and food security, energy, education and human development. human capital, as well as the COVID-19 response initiative.

Between 2015 and 2020, the federal government committed a total of 11.679 billion naira in debt service, while 8.31 billion naira was spent on capital / development spending.

A breakdown of the amount showed that in 2015 and 2016, 953.620 billion naira and 1.475 billion naira, respectively, were spent on debt service, while 1.841 billion naira and 2,203 billion naira were spent on debt service. were assigned to the same position in 2017 and 2018, respectively.

Analysis of the 2022-2024 Medium-Term Expenditure Framework and Budget Strategy Paper showed that the amounts of 2,254 trillion naira and 2,951 billion naira were allocated to debt service in 2019 and 2020. , respectively. The five-year debt service profile (2015-2020) of 11.679,845,205,997 naira also translated into an annual average of 1.386 trillion naira.

Barely three months after the Senate approved the president’s $ 8.3 billion and € 490 million loans, the alarming rate at which President Buhari continues to borrow has led the country to sink more in crushing debt.

The staggering amount has also worried many Nigerians, forcing them to question whether lawmakers are properly monitoring or asking questions about how loans are spent through monitoring.

For example, Senate Speaker Lawan had from the start of this administration’s second term made it clear that whatever Buhari wanted had to be approved because the president still had good intentions for Nigeria.

With the “rubber” nature of the current 9th National Assembly, the new loan application is almost approved, as no one expects the legislature to question the executive’s unbridled appetite for loans.

The only voice that spoke against the loan was former Senate Leader Senator Ali Ndume, who accused the Lawan-led Ninth Senate of denying lawmakers the opportunity to debate and deliberate on critical issues, stressing that this has already created a false perception of the Senate as a “rubber stamp” institution.

While acknowledging that he was not an expert in debt analysis, Senator Borno Sud lamented that the country’s borrowing rate is increasing is worrying.

Ndume said: “It is not bad, for example, to borrow money from the bank at reasonable interest to buy a car, especially when you have a family – wife and children to take to school. , and which you plan to repay gradually with your salary. This is good, because you cannot afford the money to buy the car on your own. Borrowing becomes a necessity.

“But, when you borrow and you can’t buy fuel, you keep borrowing to buy fuel and you give the car as collateral to collect fuel… I don’t agree. It’s not the loan. And this loan request that the president sent to the National Assembly is part of the approved external borrowing plan, but as I said. I’m just very careful ”.

He advised his colleagues to take a critical look at the state of the loan, its purpose, and if necessary seek an alternative or negotiate the terms, rather than rushing to approve it just to stay. in the president’s good book, even at the expense of the country.

Ndume added: “Look what the loan is for in the first place – is it necessary? Are the terms good? Borrowing is not a crime, but when the debt service rate goes up and I understand it hits 80 to 90 percent, you have to be careful, you have to look for alternatives.

“There are some loans that are just absolutely necessary, there are some that are not necessary. There are some that can be delayed, there are some whose terms can be negotiated or renegotiated. This is what to analyze and see if it is necessary. Let’s see the implications and what the money is for.

“For example, we have an infrastructure deficit in this country and what we hear when people come to Abuja or when allocations are made, you cannot say what is done.”

Ndume stressed that he was not happy with the way the upper house under Lawan’s leadership was handling the issue of foreign loans.

He said: “Another thing that worries me is the way the Senate is handling the situation. The Senate, by definition, is the deliberation chamber. When things like this (loan application) happen you don’t just say, because you want to be good, you approve of it. No. You are supposed to look at it with a critical eye. Cross the T’s, point at the I’s, ask questions, pick up the people you represent, ask them if they agree. Not that we just sit back and approve of it.

“We thought it could be good, but the way we do it makes the people we represent look at us with suspicion. There are situations where time is running out and you have to act quickly, so you have to take people. I feel pain when they say “you people again”.

“You call us rubber stamp and all that.” But if there are some things that can wait, analyze and not rush. We rushed to approve some loans. So far we haven’t had the money. So why did we rush? These are the questions that come to me most of the time. “

Despite Ndume’s warning, House of Representatives spokesperson, the Hon. Benjamin Kalu told reporters last Thursday that if the House is concerned about the country’s debt burden, it will approve the president’s new loan request provided parliament is convinced of the use of the loan.

He said, “There is a planned new borrowing of 4.89 trillion naira. We are considering approving it provided there is provision of the details of the borrowing plan and where it goes because it has been reflected in the MTEF.

“Now when you break down this proposed expenditure for 2022, which amounts to 13.89 trillion naira, you get a total recurrence, non-debt of 6 21 trillion naira, personnel costs per MDA at 3. 47 trillion naira and capital expenditure excluded. transfers of 3.26 trillion naira; recurrence of special intervention amounting to 350 billion naira and special intervention capital of 10 billion. We believe that these should be approved but subject to debate by the House. “

Indeed, the inability of the National Assembly to question the executive’s obsession with loans has encouraged the current administration to embark on a wave of borrowing which will sooner or later plunge the country into a serious crisis. economic crisis.