Former President Olusegun Obasanjo has said borrowing to accumulate debt for the next generation is criminal.
Obasanjo said this in reaction to the Federal Government’s plan to source fresh loans.
Last week, President Muhammadu Buhari wrote to the Senate to seek approval to borrow $4,054,476,863 and €710 million in an addendum to the 2018-2020 borrowing plan.
In a letter Senate President Ahmad Lawan read at the senate, Buhari explained that there is a need to raise more funds for some “critical projects”.
Although the ruling All Progressives Congress (APC) justified this, many have criticised the request.
Surprisingly, Ali Ndume, a serving APC senator from Borno State, said he was worried over the parliament’s haste to approve loans.
Speaking with Channels Television, Obasanjo said if the existing debt is left unserviced or unpaid, it might become a problem for successive administrations.
He said while borrowing is not a problem, obtaining loans when there is no capacity to pay back is an issue.
“If you want to build a commercial house and you go and borrow money, and you have 50 per cent of your own money and you borrow 50 per cent and in five years, you pay the 50 per cent that you borrowed. That is a wise thing to do. But if you have to go and borrow money for you to be able to feed yourself and your family, that is a stupid thing to do.”
“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?
“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?”
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.”