The rate of borrowings by the federal government is increasing and worrisome, Borno senator, Ali Ndume, has said.
He said it is even more worrisome when there is little or nothing to show what the loans have been used for. This is even as he faulted the Senate for rushing to approve these loan requests.
The lawmaker made these comments during a press briefing at the National Assembly on Thursday.
Mr Ndume, who represents Borno South, on the platform of the All Progressives Congress (APC), was reacting to the recent loan request sent by President Muhammadu Buhari to the Senate for consideration and approval.
The president, who is also of the APC, in a letter on Tuesday, sought the approval of the Senate to borrow another $4 billion (4,054,476,863) and €710 million loan from bilateral and multilateral organisations to fund the deficit in the 2021 budget.
While he said the loan request is an addendum to the 2018-2020 borrowing plan, he also asked the lawmakers to approve grant components of $125 million.
He told the lawmakers that the need to borrow more funds is to meet “emerging needs” for some “critical projects.”
Tuesday’s request generated criticisms from Nigerians including the opposition party, PDP. While the party cautioned the NASS against approving the request, saying it could set the country’s debt profile skyrocketing without a feasible repayment plan, the APC said the loans are for “the good of the country” and the well-being of the citizenry.
Mr Buhari’s latest request comes barely two months after the National Assembly approved his earlier request to borrow $8.3 billion and €490 million loans contained in the initial 2018-2020 borrowing plan.
For Mr Ndume, it is one thing to borrow funds and it is another thing to properly invest and manage the funds.
“I’m not an expert in debt analysis. Honestly, the rate of our borrowing is increasing and is worrisome. But it is not the borrowing that is the problem as I always say, it is what you do with what you borrow.
“It is not the borrowing. And this request for loan that the president sent to the National Assembly is part of the approved external borrowing…
“You guys should look at what the borrowing is for in the first place. Is it necessary? Are the terms good? Borrowing is not a crime but when the rate of debt servicing increases..and I understand it is getting to 80, 90 per cent. You have to be cautious. You have to look at alternatives,” he said.
The lawmaker said while some borrowings are necessary, others are totally not necessary. And similarly, the terms of some borrowings should be negotiated or renegotiated.
“This is what we should analyse and see if it is necessary. Let us look at the implications and what the money is meant for.
“For example, we have an infrastructural deficit in this country and with what we hear when people come to Abuja or when allocations are made, you can’t tell what is done with it.”
Mr Ndume also frowned at the Senate’s attitude of speedily approving the president’s loan requests without thoroughly scrutinizing the requests or even rejecting the requests.
“Another thing I’m worried about is the way the Senate is handling it. The Senate, by definition, is the House of deliberation.
When things like this (loan request) comes, you don’t just say, because you want to be good, you approve it. No.
“You’re supposed to look at it critically. Cross the Ts, dot the Is, ask questions, carry the people you are representing along, ask if they agree. Not that we just sit down and just approve it.
“We thought it might be good but the way we do it make the people we represent look at us suspiciously. There are situations where the time is short and we need to act fast, then we’ll have to carry the people along. I feel pain when they say ‘you people again’. This is the last one, I won’t don’t again. You call us rubber stamps and all that…
Mr Ndume disclosed that some loan requests hurriedly approved by the Senate, have not been released till date.
He, however, did not state the particular loan.
“We rushed to approve certain borrowings. Up till now, we didn’t get the money. So why did we rush? These are the questions that come to my head most of the time,” he said.
Nigeria’s deficit has been on the rise in the last few years. Already, the 2021 budget has a deficit of N5.6 trillion.
The president, in 2020, had acknowledged the fact that the deficit in the 2020 budget was more than the three per cent threshold as established by the Fiscal Responsibility Act, 2007.
The Act provides that the deficit should not be more than three per cent of GDP.
The measure, he said, was necessary due to the “existential challenge of coronavirus pandemic and its aftermath; I believe that this provides a justification to exceed the threshold as provided for by this law.”