Former President Olusegun Obasanjo said in South Africa yesterday that the Federal Government’s plan to source for fresh loans is understandable if the borrowing is for development and not recurrent expenditure.
President Muhammadu Buhari last week wrote to the National Assembly, seeking approval to borrow fresh sums of $4,054,476,863 and €710 million in an addendum to the 2018-2020 borrowing plan. At the weekend, Presidency also clarified that major proportion of the loan would be used to finance 15 infrastructure projects
In July, the national assembly approved the sums of $8.3 billion and €490 million loans contained in the initial 2018-2020 borrowing plan.
Speaking to Channels Television on the sidelines of an event in South Africa, he said if the existing debt is left unserviced or unpaid, it might become a problem for successive administrations.
Obasanjo said, “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 to pay itself?”
While noting that borrowing is not a problem, the former Nigerian leader stated that what could be a problem would be what one is borrowing for and the plan or capacity to pay back.
“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?” Obasanjo asked.
The ex-president recalled that during his tenure in 1999, the country was spending $3.5 billion to service debts that kept on increasing.
“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 continued to rise as the Federal Government seeks foreign loans to deliver key infrastructural projects.
In the letter, Buhari explained that owing to “emerging needs,” there is a need to raise more funds for some “critical projects,” while seeking the parliament’s nod to also approve grant components of $125 million.
The request was in a letter read by Senate President Ahmad Lawan on the floor of the upper legislative chamber on Tuesday.