Why the FG need N9.61trillion loan” - FG

On Tuesday, October 25, when the President requested the National Assembly’s accelerated approval of the borrowing plan, it was shocking because it is the biggest single external loan request by any government in recent history.

Minister of finance Mrs kemi Adeosun spoke on why the federal government wants to take a loan of about N9.61 trillion, President Buhari said it was needed to fund key projects in the country.

The loan which would include a $575 million World Bank loan would according to the President fund projects cut across key sectors of the economy, with special emphasis on infrastructure development, agriculture, health, education, water supply, growth and employment generation, poverty reduction through social safety net programmes and governance and financial management reforms. The president said the proposed programmes would receive about $11.274 billion of the total loan, while special infrastructure projects would take $10.69 billion. Euro bonds will take $4.4 billion and federal budget support, $3.5 billion.

The World Bank loan would be used to finance polio eradication support and routine immunization project ($125 million); community and social development project ($75 million), and Nigerian states health programme investment project ($125 million).

The state education programme investment project ($100 million), Nigerian youth employment and social support project ($100 million), and Fadama II project ($50 million) will also be funded out of the loan, with the hope that it would help the economy out of recession.

Speaking on the loan, the minister of finance, Kemi Adeosun, had also said as part of an external borrowing plan approved by the Executive Council of the Federation, the government would borrow cheapest available monies to fund key ongoing projects.

Abraham Nwankwo, the Director-General, Debt Management Office (DMO), said on Tuesday, October 25 that conventional public borrowing was necessary for Nigeria to pull the economy out of recession. He also explained that with the huge “structural financing gap (SFG),” the country needs to tap capital from all available sources, including short, term and long-term borrowing with tenors of 15 years and above, to survive.

However, Eze Onyekpere the lead director at Centre for Social Justice (CENSOJ), has described government decision to take more loan as “fiscal irresponsibility”. Criticizing the plan to borrow, he said: “We are paying about $61 billion in external debt already. If we add another $29.96 billion to be borrowed, we will be talking about $90.96 billion. What kind of projects are they going to use the loan on?”

The PDP has also criticized the plan to borrow, saying that the request for almost $30billion loan by President Muhammadu Buhari is totally out of place when it has recovered loots and a N6trillion budget that it is yet to account for