Moaning under the burden of the N’Assembly approved loan
The National Assembly recently approved President Muhammadu Buhari’s $ 5.8 billion loan request, which raised the country’s debt profile to around 40 trillion naira. Adedayo Akinwale Reports
Approval by the National Assembly of a new loan request
Although the country groans under the enormous loan burden that President Muhammadu Buhari’s administration has imposed on the country, the National Assembly recently approved the president’s request for loans totaling $ 5,803,364,553.50 and an item subsidy of $ 10 million under the 2018-2020 external borrowing (Rolling) Plan of the federal government.
The president had, in a communication to the National Assembly dated May 6, 2021, asked the Senate to review and approve the plan.
The Senate was the first to approve the loan following the consideration and adoption of a report by the Senate Committee on Local and Foreign Debt.
The plan contained a request for approval in the amount of $ 36,837,281,256 plus € 910 million and a grant element of $ 10 million.
Committee chairman Sen. Clifford Ordia said $ 2.30 billion would come from the World Bank, an additional $ 2.30 billion from the German Consortium, $ 90,000,000 from Islamic Development, $ 786,382,967 from the China Exim Bank, $ 276,981,586.50 from the Bank of China, and $ 50 million from the International Fund for Agricultural Development.
He noted that a report was tabled by his committee in the Senate in July 2021, recommending approval of the sum of $ 8,575,526,537 and € 490 million.
Ordia recalled that the Senate, in July 2021, approved project funding as recommended by the committee, while the committee continued to pursue legislative measures and review the pending request.
He added that on September 15, 2021, Senate Speaker Dr Ahmad Lawan read another Buhari communication containing an addendum to the 2018-2020 External Borrowing Plan in the amount of 4,054,476,863. $ and 710 million euros and a grant component of $ 125 million for various projects, and the same was also referred to the committee for other legislative measures.
Ordia pointed out that the second report was tabled by the committee in the Senate in November 2021, recommending approval of sums of $ 16,229,577,718, 1.02 billion euros and a grant component of $ 125 million.
He explained that the $ 5.8 billion request for approval was part of the committee’s mandate for the 2018-2020 External (Rolling) Borrowing Plan.
The committee noted the real concerns of Nigerians regarding the level of sustainability and viability of Nigeria’s borrowing over the past decade.
He reiterated his position on the need for a more proactive and broader approach to issues related to improving incomes, adding: “there are notable improvements in the country’s incomes”.
The House of Representatives, also in plenary session, approved Buhari’s loan request, following consideration and adoption of a report presented by the Chairman of the House Committee on AIDS, Loans and debt management, the Hon. Ahmed Safana.
Rising debt profile
Unlike any other administration since 1999, Nigeria’s public debt has grown the most under the Buhari administration.
Analysis of the government’s domestic and foreign debt showed that the country’s debt increased three times more than the cumulative figure recorded by the last three administrations.
During the last six years of Buhari’s administration, governments at the federal and state levels have accumulated loans to the tune of at least 23.34 trillion naira.
Between 2015 and 2016, the debt increased by 34.4%. In 2017, it was increased by 20%; it was the 10% increase in 2018; in 2019, the country’s debt increased by 14.6%; in 2020, it was increased by 25.4% and by 10.1% in 2021.
When President Olusegun Obasanjo took office in 1999, he paid off $ 28 billion in debt, but left $ 2.11 billion in 2007 after successfully securing debt relief from foreign creditors’ clubs. London and Paris.
The Yar’Adua / Jonathan government added $ 1.39 billion to what they encountered. It is important to note that President Goodluck Jonathan ended his term from May 2010 to May 2011 after the death of his boss, Yar’Adua.
In the 12 months following Jonathan’s reign, the federal government debt increased from 4.94 trillion naira to 6.17 trillion naira.
In May 2011, when Jonathan was elected to a new term, Nigeria’s external debt stood at $ 3.5 billion and by the time he stepped down in 2015, it reached $ 7.35 billion.
Under the Buhari administration, the country’s external loan reached $ 28.57 billion in December 2020. This means that an additional $ 21.27 billion has been accumulated.
As of December 2020, Nigeria’s domestic debt stood at N16.02 trillion as the current administration’s appetite for borrowing continues to increase.
Sadly, debt service obligations swallowed up 97% of total Nigerian government revenue in 2020.
According to civic technology nonprofit Budgit in its July report, of the 3.4 trillion naira generated in revenue, Nigeria spent 3.34 billion naira
In addition, 3.3 trillion naira was set aside for debt service in the approved budget of 2021, or about a quarter (24.3%) of the total expenditure of 13.6 trillion naira.
Recall that a sum of 1.6 trillion naira has been proposed for debt service out of the total (7.3 trillion naira) budgeted for 2017. In 2018, the figure increased while 2.2 trillion naira or 24 17% was allocated to service the debt in the N9.1 trillion Budget.
In addition, in 2019, the government proposed to devote 24% (2.14 trillion naira) of the expenditure of 8.9 trillion naira to debt service.
Analysts, however, have expressed concern that the country’s loan is already unsustainable as it absorbs 95-97% of the annual income generated.
Dataphyte’s analysis revealed that 38% of the 2022 budget would be financed by loans.
The federal government spent 2.02 trillion naira on debt service in the first six months of 2021. This figure represents 90.58 percent of the total revenue of 2.23 trillion naira generated by the FG over the course of the year. of the period.
Likewise, the federal government predicts that 3 61 trillion naira will be spent on debt servicing in 2022. This means that more than 22% of the budget for the year should already be allocated to servicing the debt. .
The debt management office claimed that the Buhari administration inherited 12 trillion naira although the total stock of debt hovers around 40 trillion naira.
There are fears that by the time Buhari leaves office in May 2023, the country will not be able to fund the loans that are said to have been accumulated by his government.