2022 budget: House members express worry over fresh loans

6. The House of Representatives yesterday, approved President Muhammadu Buhari’s request for ongoing external loans to the tune of $8,325,526,537 (USD) and €490,000,000 (Euros) under the 2018-2020 External Borrowing (Rolling) Plan.

Members of the House of Representatives have expressed worry over the decision of the federal government to borrow the sum of N5.01 trillion to finance the N6.6 trillion deficit in the proposed 2022 appropriation bill.

The lawmakers made their concerns known at the plenary on Wednesday during the debate on the general principles of the 2022 Appropriation Bill presented to the joint session of the National Assembly last week.

Commenting on the bill, Hon. Leke Abejide commended President Muhammadu Buhari for making capital projects a priority in both the 2021 budget and the proposed 2022 budget.

Quoting a reliable source, the lawmaker said some of the projects in the 2021 budget have been funded 100 per cent.

Abejide said: “That is why I have little concern about borrowing. Once the capital projects are executed, it will lead to economic growth and subsequently economic development.”

The lawmaker also expressed worry about the assumptions of the key parameters of the budget, especially the issue of crude oil production per day, it was put at 1.8 million per day.

He said: “During our Media Term Expenditure Framework (MTEF) hearing and the GMD NNPC appeared before the House Committee on Finance, he said the average production range is between 1.6 million to 1.7 million per day. So, in projection, it is always good to be realistic. The average of 1.7 million per day is more realistic than going higher because when there is a shock, it will be difficult for us to remedy it. I think it is over-ambitious to out it at 1.8 million barrels per day.”

In his submission, Hon. Onofiok Luke commended the president for the plausible recommendations or proposals in the budget and equally raising concerns about the fresh loans.

The lawmaker commended the federal government for the provision of about N50 billion for hazard allowance for medical personnel, stressing that part of the issues that led the medical personnel to go on strike was the hazard allowance which were not paid.

He called for an upward review of the proposed N50 billion hazard allowance for medical doctors as part of measures towards reversing the exodus of medical personnel to other countries amidst the lingering pandemic.

Luke stressed the need to invest in defence, considering the insecurity facing the country today was quite commendable, but however, urged the judicial use of the finances allocated to the sector.

He noted that the increase of statutory transfer of N10 billion to the National Judicial Council (NJC) to take up the judiciary was quite commendable.

Luke however decried the sum of N3.9 trillion for debt servicing, which represents almost 25 per cent of the whole budget, saying this is worrisome and raises some issues of concern.

He added: “Another source of concern is that the proposal before us has a deficit of N6.2 trillion and the government is proposing new borrowings to finance this deficit. What this implies is that the total public debt of Nigeria is expected to rise to N5 trillion in the 2022 fiscal year. This is worrisome not only for today but for generations unborn and the future of Nigeria. Let us do what we can to try to reduce the deficit and how we can reduce borrowing.

“Now to the next point on the issue is borrowing. There is nothing wrong with borrowing provided we borrow and put it for production, not for consumption. So, as we begin to look at it, let us take the future generations of Nigeria into consideration, while we get to borrow and make sure the borrowings are being put into productive ventures.

“While we put the money borrowed to infrastructure three clear things come to mind. We have looked at security. We need to invest in power. Let us borrow to invest in power and roads. We have road challenges across the country.”

Luke noted that the federal government should make use of the recovered loot and misappropriated funds in order to reduce the county’s deficits and borrowings.

According to him, “I don’t know whether these loots are still in the stomach of snakes or rats or animals. But if we apply these loots it would be for the betterment of the country.”

The lawmaker was of the opinion that pegging of oil price at $57 per barrel was very low and unsustainable.

Luke said: “Permit to add that in the last three years since 2018, we have had a year high at an average of about $60 per barrel. So we should be advocating that there should be the upping of the pegging of $57 per barrel to $60 per barrel.

“In 2018, the year high was $77. 41 per barrel. In 2019 it was $66.24. In 2020 it was $63.23. As of today, the Brent is $83.27. Bonny bright is $82.30. So we can have an average of $60 per barrel and that would be sustainable for us.”

He pointed out that the target of 13 per cent inflation is not feasible, but said there was a need to have a mechanism that would address the cost of food, cooking gas and electricity bills.

Contributing, the Minority Leader of the House, Hon. Ndudi Elumelu, also expressed worry about the loan, saying why there’s nothing wrong with the loan, but noted that when the loan is taken, it should be for a good purpose.

Elumelu said: “With the emergence of COVID-19, this budget should be able to address those abnormalities before us, by ensuring that our medical centres are up to date with infrastructural technology required. I see no reason why this National Assembly should patronize such agencies. If we find out that truly, they have not done anything to the previous budget. I submit that this National Assembly should not for any reason give money to that agency.”

On his part, the Deputy Minority Leader, Hon. Toby Okechukwu, lamented that with over N3 trillion for debt servicing and more than N6 trillion for recurrent expenditure, whatever that is going to capital expenditure is about 2.8 trillion.

He said: “With over N3 trillion for debt servicing and more than N6 trillion for recurrent expenditure, this means that whatever that is going to capital expenditure if you take tetfund and these agencies away, it’s about 2.8 trillion. There’s no way we can continue to commit that level of the fund to recurrent expenditure and to debt servicing and we shall overcome.

“This budget of economic growth and sustainability as presented by Mr President, it will be appropriate to say that in 2020, there was the complete implementation of the budget. In 2014, we had a budget of about N4.8 trillion, in 2022 we have a proposed bill of N16.3 trillion. If we do the mathematics as per the exchange rates of the naira, that same money in spite of the quantum of N16 trillion as against the N4 trillion all get down to $40 billion. It’s all motion, no movement.”

Okechukwu said it was very instructive that the subsidy regime, which was being baptised as under-recovery, was hurting the economy, adding that: “We need to deal with it. It’s a matter of living in denial to continue to subsidize petroleum.”

Also, Hon. Sergius Ogun said nobody is satisfied with budget implementation in this country, stressing that there was a need to review the budget quarterly.

He said this would ensure that the budget is implemented in line with the expectations of the lawmakers.

Earlier, the Leader of the House, Hon. Ado Doguwa, who led the debate, said N16.49 trillion may have sounded quite extraordinary, but added that there was a need for government to invest heavily in the infrastructural facility in the country.

He urged the lawmakers to pass the budget within a good time in order to sustain the January -December budget cycle.

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