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$5.5bn loan request: PDP, APC at war as FG explains borrowings

By Emmanuel Aziken, Clifford Ndujihe, Charles Kumolu, Gbenga Oke & Omezia Ajayi

…PDP should hide its head in shame – Junaid
…Borrowing not bad for infrastructure – SERAP
…Why we’re borrowing more — Adeosun
ABUJA – The All Progressives, Congress, APC, and the opposition Peoples Democratic Party, PDP, were, yesterday, locked in a verbal combat over the propriety of the Federal Government’s borrowing plan. The face-off follows the administration’s request for legislative approval for its $5.5 billion loan to finance the 2017 budget.

President Muhammadu Buhari (r) exchanging banters with the APC National Chairman, John Oyegun and the Chairman PDP Caretaker Committee, Ahmed Mekarfi (l) during the meeting between the Presidency and National Leaders of the APC and the PDP at the State House, Abuja. Photo by Abayomi Adeshida 25/08/2017

Reacting to earlier denunciation of the plan by the PDP, which accused the APC of mismanaging the “buoyant economy” it inherited from it, the APC through its spokesman, Mallam Bolaji Abdullahi flayed the opposition party for scaremongering even as it justified the loan upon what it claimed as the mismanagement of the economy by the PDP in its 16 years in power.

The PDP was quick to respond, yesterday, flaying the APC for trumping only the blame game as its lone agenda in power, saying the ruling party had shown that it was never prepared for governance.

Second Republic politician, Dr. Junaid Mohammed was quick to flay the PDP, saying the party should hide its head in shame while the Social Economic Rights and Accountability Project, SERAP, said obtaining a loan for capital projects was not necessarily a bad idea.

A management consultant, Chief Cliff Mbagwu, however, urged the administration to avoid plunging the nation into another debt trap.

Blaming the PDP for the country’s present position, the APC in a statement said:

“If the PDP thinks that by spewing falsehood and unsubstantiated claims, the Party will return to power in 2019, then the PDP needs to seriously rethink its strategies. Nigerians are not gullible and can differentiate between a Party that brought the country to where it is today and the Party clearing the rot and rebuilding the country”, the APC declared.

The ruling party also charged members of the National Assembly to rise above the foibles of political partisanship and urgently accede to the president’s request, noting that such ambitious borrowing plans are inevitable in all developing economies.

“In developing economies, governments typically resort to borrowing to finance economic development projects because taxation and other revenue streams may not necessarily provide sufficient funds for economic development. The recent borrowing plans proposed by the President Buhari administration is no different as the President has stated in his request to the National Assembly that the loan will be used to finance the 2017 budget deficit and invest in critical and verifiable infrastructure project which will ultimately grow the economy.

“The PDP in its statement unapologetically claimed that it “meritoriously” governed the country for 16 years and “handed over a buoyant economy to the APC in 2015”. Really, what could be farther from the truth? The APC considers the claim a new height of PDP’s insensitivity to the populace and has further exposed the PDP as a Party unrepentant for the rot it left the country after its 16 years rule”, APC stated.

According to the APC, even when crude oil sold above $100, the immediate-past PDP administration struggled to build savings, while the excess crude account was misspent.

“Poor capital expenditure meant badly-needed infrastructure development was put on hold. This forced construction companies with government contracts to cut back and sack thousands of workers.”

APC said Nigerians will sadly recall how in the lead-up to President Buhari’s assumption of office, former Finance minister and coordinating Minister of the Economy, Dr. Ngozi Okonjo-Iweala in May 2015, revealed that Nigeria was borrowing to pay government salaries.

“The borrowing plan of the President Buhari-led administration is inevitable in view of the current economic realities in the country. As stated in the president’s loan request to the National Assembly, the loan will be invested in infrastructure projects such as the Mambilla Hydropower Project, Construction of a Second Runway at the Nnamdi Azikiwe International Airport, counterpart funding for Rail projects and the construction of the Bodo-Bonny Road, with a Bridge across the Opobo Channel.”

PDP reacts

Reacting to the APC assertions, the PDP spokesman, Prince Dayo Adeyeye told Vanguard yesterday: “This government has already shown Nigerians that their only programme, their only plan, their only policy is to keep on blaming the past PDP administration. They don’t have any positive plan. I have never seen anywhere in the world where the only agenda of a government would be to push forward to the public a blame agenda; to blame the past administration for all their woes.

“So, it is not surprising, Nigerians should begin to ask these people to move forward from the blame game. You cannot run a country based on blaming the past; whatever happened in the past people must move forward. Remember that when the American economy collapsed in 2007, Obama came in and I never saw Obama blame anybody, he kept on working and the economy was revived within one or two years so much so that he kept on creating a number of jobs and he was re-elected.

“What will these people claim after two years? We do not have any coherent economic policy; they do not have any plan, so, the only thing they have been doing is to blame. You blame when you do not have any plan of your own. People are tired of this blame game; PDP did this, PDP did that. There is no government anywhere in the world that can be perfect; there is no government that will come into office in this world that will not have something negative to say about the previous government. None! Otherwise, why do you seek election? Because you think you can do better. Then, you have no right to come and keep blaming for problems you said you could fix.

“You keep on referring that somebody created it; that is not the issue. You were elected to solve a problem and what I would want the APC to agree is that they are simply incapable, and if they do this openly, it would be more honourable and we can come back in 2019 and take over the government and fix whatever problem that they may have created.

“The truth of the matter is that they have added to whatever problem they met on ground,” the PDP spokesman said.

PDP should bury their head in shame  – Junaid Mohammed

The PDP’s assertions nonetheless, the APC administration got support from unusual quarters with fiery Second Republic lawmaker, Dr. Junaid Mohammed charging the opposition to bury its head in shame.

He said: “Frankly speaking, I do not have the details about the capital projects the Federal Government wants to use the money to fund. However, I believe the government should have put the funds into next year’s budget since this year’s budget will expire in two months.

“I think the FG should explain to Nigerians what it intends to do with the money they are borrowing. But for PDP to be talking right now shows the party is shameless. I can confirm that majority of the problems this country is going through right now were caused by the PDP. Even though I support robust opposition by the PDP, they should bury their head in shame.”

Obtaining loan for capital projects, economy is not bad — SERAP

Also speaking, the Executive Director of Socio-Economic Rights and Accountability Project, SERAP, Mr. Adetokunbo Mumuni said: ‘’I believe any government in power should be able to set its priorities correctly. What is important is what the government wants to do with the loan they want to obtain. For instance, I will support a loan that will be used to finance infrastructure and economy because, in years to come, the projects would yield funds that will be used to pay the loan. But I am not in support of any loan that will be used to finance the salaries and voluptuous consumption of public officials the way it was done when PDP was in power. I am against any loan that would be used to finance the appetite of public office holders.”

BRIEFING—From left: CBN Governor, Mr Godwin Emefiele; Head of Nigerian Delegation and Minister of Finance, Mrs Kemi Adeosun and the Permanent Secretary at the Ministry of Finance, Mr Mohammed Duste, during post-World Bank and IMF 2017 Annual meeting press briefing, held in Washington DC, USA, yesterday. PHOTO. State House Photo.

We must avoid getting into another debt trap – Mbagwu

Management Consultant, Chief Cliff Mbagwu, however, urged the government not to get Nigeria ensnared in another debt trap after the PDP Administration of President Olusegun Obasanjo got the country out of the Paris Club.

Noting that Nigeria’s debt profile is rising, he said there is nothing wrong in taking loan so long as the loan is self-amortizing and used to build critical infrastructure that will boost economic development and the revenue profile of the country is good.

He cautioned against “taking loans to build infrastructure in the village of the President, Vice President, Governor or any other person in power because such projects cannot generate funds to amortize the loan. Such infrastructure should not be financed with a loan.”

An amortized loan is a loan with scheduled periodic payments that consist of both principal and interest. An amortized loan payment pays the relevant interest expense for the period before any principal is paid and reduced.

His words: In every situation, even at the individual level, borrowing can be very dangerous if it is not self-amortizing. If the loan can amortize itself over time, it will create economic opportunities. Otherwise, you will create problems for the future generation.

‘’The loan profile of the country is getting higher, they should be careful. Former President Obasanjo worked hard to help us exit the Paris Club debt. We are getting back to the debt trap.”

 


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