$5.5 BILLION LOAN: IS BUHARI MORTGAGING NIGERIAN CHILDREN’S FUTURE?

The Peoples Democratic Party (PDP) says it receive with shock, the plan by the government of the All Progressives Congress (APC), to plunge Nigeria into further debt, and consciously mortgage the future of our unborn generations through needless and mindless borrowing of the sum of $5.5 Billion.

"Like other well meaning Nigerians, we consider this new bid for a foreign loan of $5.5 billion being sought by the administration of President Buhari as an attempt to push the nation down into the black hole of debt that will affect negatively, the future of this nation.

"As a party that governed this nation meritoriously for 16 years and handed over a buoyant economy to the APC in 2015, we are concerned that by the time Nigerians would have the opportunity to push out the APC government in 2019, the economy of the nation would have been damaged irreparably.

"We are dismayed at the rate at which the APC government is plunging the nation into debt through local and foreign borrowing without concomitant developmental projects in any sphere of the nation's economy to justify the huge borrowing.

"The figure released recently by the. Debt Management Office (DMO) stating that the nation under the administration of the APC government in the last two years of being in office, has borrowed N7.51 trillion, is mind-boggling.

"Mind boggling because all round infrastructural decay has now reached alarming proportions. The roads have deteriorated , the state of power supply has become worse, there have been no increases in wages to match skyrocketing inflation . As a result workers in educational institutions and other government agencies have spent more time at home observing strike action than they spend at work, insecurity has sky-rocketted beyond what anyone can imagine, while the those in power continue to delude themselves that they are providing plausible leadership for the country.

"We are constrained to ask the government of President Muhammadu Buhari to explain to Nigerians what his government has done with the several huge sums borrowed in the last two years in the name of financing infrastructural development in the country.

"The data shows that since President Buhari was sworn in, the nation’s debt has risen by 61.96% in only two years.

"As major stakeholders in the Nigerian project, we are worried that if the National Assembly does not stop this latest demand for foreign loan, the money when released, will go the way of other loans obtained in the last two years without any tangible result to show for it.

Signed. Prince Dayo Adeyeye National Publicity Secretary , PDP

 

It will be recalled that President Muhammadu Buhari recently asked the National Assembly to approve two external loans worth $5.5 billion. But the terms and conditions for such facilities are not made known.According to Buhari in a letter read by Senate President, Bukola Saraki, during a plenary session, the first loan of $2.5 billion is for the financing of the deficit and capital projects in the 2017 budget. The second loan of $3.0 billion is for the refinancing of maturing domestic debt obligations through the issuance of Eurobonds or a loan syndication.

The president informed the legislators that the terms and conditions of the loans would only be known when they are ready for collection.“With respect to the terms and conditions of the proposed external borrowings, the Senate may wish to note that being market-based transactions, the terms and conditions of the borrowings can only be determined at the point of issuance of finalisation based on prevailing market conditions in the International Capital Market (l.C.M.),” he declared.

The request generated an initial controversy on the floor of the Senate as the lawmakers protested against the earlier impression that the request had been pending before the Senate and that its delay in approving it had caused a major hitch in the implementation of the budget.

Justifying his loan request of $2.5 billion, President Buhari invited the Senate to “note that in order to implement the external borrowing approved by the National Assembly in the 2017 Appropriation Act, the Federal Government issued a $3OO million Diaspora Bond in the International Capital Market (ICM) in June 2017.The balance of the 2017 external borrowing, in the sum $3.2 billion is planned to be partially sourced from issuance in the ICM of $2.5 billion through Eurobonds or a combination of Eurobonds and Diaspora Bonds, while $700 million is proposed to be raised from multilateral sources.

“It should be noted that the intention is to issue the Eurobonds first, with the objective of raising all the funds through Eurobonds, and that Diaspora Bonds will only be issued where the full amount cannot be raised through Eurobonds.”

He listed the projects as the Mambilla Hydropower Project; construction of a second runway at the Nnamdi Azikiwe International Airport; counterpart funding for rail projects and the construction of the Bode-Bonny Road, with a bridge across the Opobo Channel.”

On the $3 billion for the re-financing of domestic debts, the president said: “In addition to the implementation of the external borrowing approved in the 2017 Appropriation Act, in order to reduce debt service levels and lengthen the tenor profile of the debt stock, the Federal Government seeks to substitute maturing domestic debt with less expensive long-term external debt.”

According to him, the Federal Government plans to source $3.0 billion through the issuance of Eurobonds as approved by the Federal Executive Council at its meeting of August 9, 2017.Listing what he believed could be the benefits of the loan, Buhari stated that the proposed re-financing of domestic debt through external debt would achieve more stability in the debt stock while also creating more borrowing space in the domestic market for the private sector.

He drew the attention of the Senate to the fact that in the 2017 Appropriation Act, debt service at N1.663 trillion represents 32.73 per cent of the government’s total expenditure, which makes it important to take urgent steps to reduce debt service costs.

At another forum yesterday, Buhari announced that funds recovered from treasury looters would be deployed into the financing of the budget.It was, however, not clear if the National Assembly has given approval for the use of the funds, but President Buhari who made the announcement in Abuja said the decision on that had been taken.

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