Former President, Chief Olusegun Obasanjo has flayed the Federal Government’s plan to source for fresh loans, saying borrowing to accumulate debt for the next generation was criminal.
It will be recalled that President Muhammadu Buhari had written the National Assembly, seeking approval to borrow fresh sums of $4,054,476,863 and €710 million in an addendum to the 2018-2020 borrowing plan.
In the letter, the President explained that owing to “emerging needs”, there was need to raise more funds for some “critical projects”, while seeking the parliament’s nod to also approve grant components of $125 million.
The request was in a letter read by Senate President Ahmad Lawan on the floor of the upper legislative chamber on Tuesday.
In July, the National Assembly approved the sums of $8.3 billion and €490 million loans contained in the initial 2018-2020 borrowing plan.
‘It’s problem for incoming govts’
Speaking to Channels Television on the sidelines of an event in South Africa, Chief Obasanjo said if the existing debt was left unserviced or unpaid, it might become a problem for successive administrations.
Noting that borrowing is not a problem, Obasanjo stated that what could be a problem would be what the nation was borrowing for and the plan or capacity to pay back.
“But 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?
‘Borrowing for recurrent expenditure is folly’
“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?” Obasanjo queried.
He recalled that during his tenure in 1999, the country was spending $3.5 billion to service debts that kept on increasing.
He said: “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.”
Nigeria’s debts have continued to rise as the Federal Government seeks foreign loans to deliver key infrastructural projects.
The continued borrowing of the present government has continued to generate reactions from Nigerians who see the development as mortgaging the future of the country.
Only last week, the Debt management Office, DMO, put the nation’s total debt stock at N35.5 trillion, N21 trillion of which is domestic debt.