Obasanjo questions fresh loan requests by Buhari

Former President, Olusegun Obasanjo, has said that it is criminal to keep borrowing without servicing it, noting that it is like killing generations yet unborn with

Amid concerns over debt overhang, President Muhammadu Buhari recently requested the Senate to consider and approve an external borrowing plan amounting to about N2.5 trillion to fund projects captured under the 2018-2021 borrowing projections.

 If approved, the country’s documented national debts will balloon to over N35 trillion.

Buhari, in the letter, explained that the projects listed in the 2018-2021 Federal Government Borrowing Plan were to be financed through sovereign loans from the World Bank, French Development Agency (AFD), Export-Import Bank of China, International Fund for Agricultural Development (IFAD), Credit Suisse Group and Standard Chartered/China Export and Credit (SINOSURE).

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The amount is in the sum of $4.05 billion, €710 million and a grant component of $125 million. The money, the President explained, would be used to fund federal and state government projects across key sectors such as infrastructure, health, agriculture and food security, energy, education and human capital development, as well as the COVID-19 response initiative.

Reacting to the proposed loan request, Obasanjo while speaking on Channels TV in South Africa, said although it is not bad to borrow if the funds are properly used and serviced.

He said: If you want to build a commercial house and you go and borrow money, and you have 50 percent of your own money and you borrow 50 per cent and in five years, you pay the 50 per cent that you borrowed. That is a wise thing to do. But if you have to go and borrow money for you to be able to feed yourself and your family, that is a stupid thing to do.

“So, if we are borrowing for recurrent expenditure, it is the height of foolery. If we are borrowing for development that can pay itself, that is understandable; then how long will it pay itself? But we are borrowing and accumulating debt for the next generation and the next generation after them, it is criminal, to put it mildly. What are we borrowing for?

“When I came into government and was elected President, we were spending $3.5bn to service debt, and even with that, our quantum of debt was not going down.