National Assembly defends Buhari’s $4.9bn loan plan, APC, PDP clash over debt
The Senate on Wednesday justified the President, Major General Muhammadu Buhari (retd.)’s plan to obtain $4.054bn and €710m ($$839m) loans.
The Chairman of the Senate Committee on Media and Public Affairs, Senator Ajibola Basiru, who stated this in an interview with one of our correspondents in Abuja, said there was no country that does not engage in deficit financing.
Basiru said this as the Director General of the Debt Management Office, Patience Oniha, while giving a breakdown of the public debt stock for the second quarter of 2021 during a virtual media presentation on Wednesday, said Nigeria’s total public debt stock rose from N33.11tn as of March 31, 2021 to N35.47tn as of June 30, 2021.
This suggests an increase of N2.36tn or 7.12776 per cent increase.
The President had on Tuesday submitted to the National Assembly, a request for approval to obtain fresh external loans of $4.054bn and €710m (($$839m).
According to a letter written to both chambers of the National Assembly, Buhari is also seeking the federal legislature’s approval for grant components of $125m in the 2018-2020 external rolling borrowing plan.
The President had on May 18, 2021sought the approval of the Senate to borrow $6.18bn external loan to finance this year’s N5.6tn budget deficit.
He said the loans would be used to finance critical projects and create jobs.
If the President gets the go-ahead to obtain the loans, the country’s debt profile will rise.
All countries engage in deficit financing, we’re still within borrowing limit – Senate
But in an interview with The PUNCH, Basiru allayed the fears of Nigerians over the borrowing plans of the President, assuring them that there was no cause for concern.
He explained that the latest loan request by the President was an addendum to the earlier one approved by the federal parliament and that it was still within the framework of the external borrowing plan of the government
Basiru said the President accompanied the loan request with supporting documents which contained details of what the money would be used for.
He said, “What Nigerians should be looking at is the benefit and the advantage the society would have when the loans are taken and effectively utilised.
“There is no country that does not engage in deficit financing. We are still within the approved limit guaranteed by law.
“The borrowing is for the development of the country and they are tied to specific projects.
“It is part of the borrowing plans of the government which had already been approved in the Medium Term Expenditure Framework and Fiscal Strategy Paper.
“The latest request is not a fresh loan, but an addendum to the earlier one which we have approved and it is still within the framework of the external borrowing plan of the government
“It is important to galvanise the economy and invest in critical infrastructure that will put us in a better position to prepare our country for the future
“What we should concern ourselves with is to look at the projects that the loans are attached to and the social economic benefits of those projects.”
According to Investopedia, a budget deficit occurs when a government spends more in a given year than it collects in revenues, such as taxes.
Commenting on the development, some non-governmental organisations expressed concern that the legislature had failed in its responsibility of checking the executive.
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