Much Ado About FG’s $30b Loan Request | Independent Newspapers Limited
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Much Ado About FG’s $30b Loan Request

Posted: Nov 2, 2016 at 3:05 am   /   by   /   comments (0)

Temidayo Akinsuyi

Lagos  The decision by the Senate to reject the controversial external $30b loan request of  President Muhammadu Buhari did not come to many  Nigerians as a surprise.  The reason for this can be adduced to the fact that the presidency has kept many Nigerians in the dark about certain issues that borders on the plan by the federal government to bring the country out of recession and in the interim, cushion the excruciating pains being experienced by the citizenry.  Not only are  Nigerians desirous to know the economic blueprint of the Buhari administration, they also want to know how the monies recovered so far from alleged looters of the nation’s patrimony will be utilised.

Why Borrowing Is Inevitable –  President

In his request letter to the Senate, President Buhari  explained that the exter¬nal borrowing plan would focus on projects cutting across all sectors with special emphasis on infrastructure, agriculture, health, educa¬tion, water supply, growth and employment generation, poverty reduction through social safety net programmes and governance and finan¬cial management reforms. He explained further that the loan was very necessary in view of the serious infra-structural deficit the nation is facing.

According to him, “The total cost of the projects and programmes under the borrowing (rolling) plan is $29.960billion made up of proposed projects and programmes loan of $11.274billion, Special Na¬tional Infrastructure projects $10.686billion, Euro bonds of $4.5 billion and Federal Government budget support of $3.5billion.”
“Considering the huge in¬frastructure deficit currently being experienced in the country and the enormous financial resources required to fill the gap in the face of dwindling resources and the inability of our annual bud¬getary provisions to bridge the deficit, it has become necessary to resort to pru¬dent external borrowing to bridge the financing gap, which will largely be applied to key infrastructure projects namely power, railway and roads projects among oth¬ers”, he added.
Buhari in the virement request said the N180 bil¬lion would be moved from monies already appropri¬ated for special intervention programmes – both recur¬rent and capital for fund¬ing of critical recurrent and capital items. He further said the request arose due to a number of reasons includ¬ing: shortfalls in provisions for personnel costs, inad¬equate provision ab initio for some items like the amnesty programme; continuing re¬quirements to sustain the war against insurgency; and depreciation of the Naira.
The president’s letter read in part: “In the course of implementing the 2016 Ap¬propriation Act, several MDAs have presented issues pertaining to salary short¬falls, the settlement of part of which has led to the deple¬tion of the Public Service Wage Adjustment (PSWA). This Vote, which had a pro¬vision of N33, 597,400,000, now has a balance of N2, 758,296,000.
“The Committee on Sal¬ary Shortfalls, set up by the Honourable Minister of Fi¬nance, has come up with a figure of N41, 875,983,020 as the amount required to settle salary shortfalls of non-lPPlS MDAs. Similarly, most of the lPPlS MDAs have already been notified by the Office of the Accountant-General of the Federation (OAGF) that they would soon be locked out of the IPPIS Platform as their Personnel Cost budgets would not cover salaries for the rest of the year.
“The lPPlS Department in the OAGF has forwarded a figure of N20, 058,204,856 as the sum required to cover the shortfall in salaries of lPPlS MDAs. The Security-related lines in the Service Wide Vote, specifically Op¬erations internal for the Armed Forces (N13billion) and Operation Lafiya Dole (N8billion) have all been totally released while the Ni¬gerian Air Force needs about (N12,708,367,476) to cover the foreign exchange differ¬entials in the procurement of its critical capabilities.
“The Contingency Vote of N12billion has a balance of only N1, 827,570,443. it is considered necessary to augment this vote in the light of frequently emerg¬ing contingencies. Only N20, 000,000,000 (already fully released) was provided in the 2016 budget for the Niger Delta Amnesty Pro¬gramme. Consequently, the allowances to ex-militants have only been paid up to May 2016. This is creating a lot of restiveness and com¬pounding the security chal¬lenge in the Niger Delta.
“The Provision for NYSC in the 2016 budget is inade¬quate to cater for the number of corpers to be mobilized this year. In fact, an addition¬al N8.5billion is required to cover the backlog of 129,469 corps members who are cur¬rently due for call-up but would otherwise be left out till next year due to funding constraints. Similarly, the provision for meal subsidy for the Unity Colleges is in¬adequate for the number of students in the schools.
“Also, there was no pro¬vision for feeding of ca¬dets at the Police Academy, Wudil, and Kano. These situ¬ations are hampering the operations of the affected agencies. The provision for Statutory Transfer to the Public Complaints Com¬mission (PCC) was reduced to N2, 000,000,000 in 2016 from N4, 000,000,000 in 2015. Consequently, the agency is experiencing diffi¬culty in paying salaries of its personnel as and when due.
“Due to the devaluation of the Naira, the budgetary provisions for the foreign missions are no longer suffi¬cient to cover all their costs. The provision for Presiden¬tial Initiative for the North East (N12, 000,000,000) has a balance of less than N1.5bn, and there continue to be emerging challenges with the Internally Dis¬placed Persons (lDPs) in the zone”.

Questions Over Recovered Loot

Even before the  President wrote to the Senate for the external loan request, one question Nigerians have been asking is the reason why the federal government is complaining of paucity of funds to inject into the economy when, according to Minister of Transport,  Rotimi Amaechi, it has recovered N3.4 trillion in cash and assets while about N115 billion worth of cash and assets have been discovered in the United States, United Arab Emirates and United Kingdom which were also bought with looted funds.
Providing answer to this question, Minister of  Budget and National  Planning, Udoma Udo Udoma said federal government cannot make use of the money since the legal processes are yet to be completed.

Speaking in a similar vein the  Minister of Finance, Kemi Adeosun also pointed out that though the federal government has, aside cash, recovered landed properties, high valued automobiles and jewelries from looters, most of the monies recovered from treasury looters could not be used because they are bug down with litigations.

The minister who spoke at the National Assembly during an interactive meeting on the performance of the 2016 Budget with the Senate Committee on Appropriation explained that some of the buildings recovered had been converted into office spaces for government agencies that had no permanent offices, while the high valued cars could be used for the conveyance of foreign dignitaries on a visit to the country.

PDP Kicks Against Borrowing

Nigeria’s main opposition party, the Peoples Democratic  Party (PDP), while opposing the borrowing plan also asked the National Assembly not to approve the request by the President.
Spokesperson of the  Senator  Ahmed Makarfi faction, Prince Dayo Adeyeye said it disagreed with the Federal Government on this move, and called on President Buhari to explain to Nigerians what his administration had done with the recovered looted funds.
Adeyeye said that President Buhari must itemise what he intends to finance with the proposed borrowing of almost $30b instead of lumping it up in a coded term, and to plunge the nation’s future into burden of debt. More so, he said that the President’s approach cannot be the preferred solution to the economic quagmire which he said was created by the present government.
It further averred that the bid would take Nigeria back into the “captivity of the Paris Club of debtor nations, which a preceding PDP administration exited Nigeria from.

The statement read in part “We totally disagree with the APC led Federal Government on this latest move,  and call on President Muhammed Buhari to first and foremost explain to Nigerians what his administration has done with the so called ‘recovered looted funds’ and how far the 2016 Budget is fairing. Also, President Buhari must itemize what he intends to finance with this proposed borrowing of almost $30b instead of lumping it up in a coded term, and to plunge the nation’s future into burden of debt. More so, this approach cannot be the preferred solution to the economic quagmire which this Government created due to ineptitude.
“This government budgeted the Sum of N6.07trn for the 2016 Fiscal Year with deficit of N2.22trn and according to the breakdown, N1.8trn was budgeted for Capital Expenditure and President Buhari is now seeking to borrow over N9trn ($29.960b) for ‘critical infrastructure’. This is absurd and way outside the government budgetary provisions for Capital Expenditure and must be rejected by all well-meaning Nigerians.
“Nigerians will recall that the Minister of Information, Culture and Tourism, Alhaji Lai Mohammed in June 2016 made public, through a press statement, an account of recovered looted funds between May 2015 and May 2016 amounting to the sums of N78.3b, $185.1m, £3.5m and €11,250m in cash; while others were under interim forfeiture. What happened to the recovered funds?Or is it the same funds the EFCC and DSS are planting in houses of opposition figures and Justices instead of channeling it into the economy? In addition, the Chairman of Economic and Financial Crimes Commission (EFCC), Ibrahim Magu recently confirmed our position when he stated that the Commission recovered more money in eight months than it recovered in 12 years.
“Nigerians need to know how much revenue government has been able to generate from crude oil, non-oil and independent revenue sources since assumption of office from May 2015 to September 2016. This clarification will boost confidence of Nigerians on the management of their resources, especially in this period of recession before thinking of engaging in external borrowing.
“It is no gain saying that the APC-led Federal Government has left no stone unturned in castigating the PDP’s 16 years as wasted even with its obvious achievements; one of which was getting reprieve from the Paris Club of Creditors.The APC led Federal Government is again taking Nigeria prior to Year 2005 when external debt burden derailed the growth of Nigeria economy and weakened the GDP before the total cancellation of  her debt. This proposed action of the APC’s government will be a great injustice to the citizens of this country now and in the future if they are plunged back into debt.
“Let us state unequivocally, that history will not forgive this APC Government and its collaborators if they allow this injustice and maladministration to our economy and citizens to stand. We, therefore, call on the two Chambers of the National Assembly to reject this anti-people request by an anti-people government that has no genuine interest for the growth and development of the people of this country.
“We again call on all Nigerians to speak with one voice and stop President Buhari from further destroying our great nation, Nigeria and by extension, Africa.”

DMO Justifies Loan Request

However, while justifying the need to borrow the money, the Debt Management Office (DMO) however said that there was an urgent need for the Federal Government to formulate an economic blueprint or road-map for the medium term.
According to the DMO, the formulation of a blueprint will engender confidence in both local and international investors on the way forward. The blueprint has become imperative since the investor perception of the country’s outlook is critical to economic recovery.
“In view of the fall in Federal Government’s revenue, the government should reinforce its initiatives aimed at diversifying the productive base of the economy, thus improving the non-oil revenue receipt,” it stated. The DMO said that concrete and urgent steps should be taken to broaden the nation’s tax base and improve efficiency in tax administration and collection” the party said.

However, the plan was truncated yesterday in the National Assembly as the  request was killed immediately it was mentioned as an executive communication by Senate Leader, Senator Ali Ndume “that the Senate do consider the request of the President Commander in Chief on the 2016 – 2018 External Borrowing Rolling Plan.” Soon after Ndume’s remarks, Senate President Bukola Saraki  puts it to Vote and those opposed to the borrowing plan had their way.