Labour Party, LP, presidential candidate during the February
25, 2023 General Elections, Peter Obi, has kicked against what he described as
Federal Government’s disturbing pattern of huge borrowing and profligate
spending on non-essential procurements, warning that such pattern would soon
wreck the economy.
The former Anambra State governor also condemned Federal
Government’s securitization of Ways and Means borrowing from the CBN which he
said is against the law and the Central Bank of Nigeria, CBN, act which
stipulates the limit of FG’s borrowing from the CBN not to exceed 5 per cent of
the previous year’s revenue.
In a statement yesterday, titled ‘Debt and Waste as Economic
Policy’ Obi said that the current trend of FG’s lavish spending backed only by
equally lavish borrowing is unsustainable and would wreck the economy in due
course.
He said: “What is emerging is a disturbing pattern of huge
borrowing and profligate spending on nonessential procurements which are being
termed ‘capital’ expenditure and are being funded with an accumulation of
debts. For instance, a good number of these so-called ‘capital’ expenditure items
as contained in the 2024 budget are more procurement and luxury projects.
“This trend of lavish spending backed only by equally lavish
borrowing is unsustainable and would wreck the economy in due course. It needs
to be halted.
“Unless this trend is halted, the nation runs the greater
risk of running into more turbulent economic waters in the near future. This is
to add my concerned voice to those of many other troubled Nigerians.
“This is the time when we need to go beyond politics and
partisan grandstanding to address the fundamental issues of rational economic
management. I am afraid that the current administration is not paying
sufficient attention to issues of rational economic management. Instead, an
unsustainable level of debt is being piled upon the economy thereby further
burdening our already distressed populace who are bearing the burden of harsh
economic policies not backed by compassionate cushioning policies.”
Tracing the problem from the previous administration, Obi
said: “Barely 26 days to the end of its eight-year tenure, the Buhari
administration got the Senate to approve a N22.7 trillion Ways and Means
borrowing from the CBN. In seven years, CBN lending to the Buhari government
had climbed 2700 per cent in flagrant violation of the CBN Act.
“Indifferent to the illegality of the excessive ways and
means borrowing, the National Assembly still approved the new Tinubu
administration’s request for an N7.3 trn securitization of the existing ways
and means facility just before considering the 2024 budget proposals. On
December 30, 2023, the last working day of the year 2023, shockingly the
President requested the National Assembly to approve the securitization of N7.3
trillion being the outstanding debt owed to the CBN, by the Federal Government.
“Almost at the same time as the illegal securitization was
approved by parliament, the president also sought and secured National Assembly
approval to borrow another $7.8 bn and €100m. No questions asked. No
explanations were sought as to the precise purpose of these borrowings all
within the seven-month tenure of this government. ‘
“Ordinarily, minimum public accountability should require
that the president and his administration offer more specific explanations
about the purpose of these borrowings. But so far, all we have been told is
that these borrowings are meant to fund ‘capital’ expenditure.
”Specifically, the continuous securitization of Ways and
Means borrowing from the CBN is against the law and against the CBN act which
stipulates the limit of the Federal Government’s borrowing from the CBN not to
exceed 5 per cent of the previous year’s revenue. ”The law also requires the
liquidation of the outstanding borrowing before any new advancement can be
made.
“More importantly, the CBN Act expressly states that all
borrowings under the Ways and Means cannot be converted to debt or securitized
if the CBN is the underwriter.
“It needs to be pointed out that the idea of securitization
of illegal borrowings from the CBN and transferring the same into our debt
stock portends danger to the future of our economy. It increases the debt
burden of the nation. It is even more worrisome because these accumulations of
debts are not being transparently and productively utilized or accounted for.
“While this new debt of N7.3 trillion has been hurriedly
approved without scrutiny by the National Assembly, the immediate public
accountability question is: can the Federal Government, which holds the trust
of the people, tell us what they used N7.3 trillion to do?
“We have always been told that all borrowings are for
‘capital’ projects, can we know the capital or productive projects this huge
borrowing is being applied to?“
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