…Urge National Assembly to scrutinise fresh requests
Economic experts have raised the alarm over lack of transparency in the federal government’s borrowing plans, warning that the country risks plunging deeper into debt.
In separate interviews, economists Prof. Tajudeen Tella and Prof. Akpan Ekpo, who spoke to BusinessDay, expressed strong reservations about the government’s request for parliamentary approval to raise $2.35 billion in new and refinanced external loans to partly fund the 2025 budget and redeem a maturing Eurobond.
The President had, in a letter read by Godswill Akpabio, Senate president, at the Wednesday plenary requested approval for a fresh borrowing plan.
The federal government is seeking to implement a N9.28 trillion borrowing plan, including N1.84 trillion in foreign loans.
However, both experts questioned the necessity and transparency of the request, especially given the administration’s claim of achieving its revenue targets.
Tella, professor of Economics at Olabisi Onabanjo University, described the new loan proposal as ‘unnecessary.’
“The 2024 budget is still being executed. So why are they talking about a loan to part-finance the 2025 budget that hasn’t even started?” he queried.
“The President said they have been able to generate enough funds to meet the requirements for the budget. If they have done that, it’s not necessary to borrow money again. For what purpose?”
He noted that Nigeria’s rising debt service burden has become unsustainable and is crowding out vital sectors.
“What we pay presently servicing debt is more than four times the budget for education and six times the budget for health,” Tella said.
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“So, the money that should have gone into improving schools and hospitals is being used to pay debts. Yet, we don’t even see the effect of those loans.”
Tella lamented that many of the loans are disbursed abroad without clear evidence of impact within the economy.
He urged the National Assembly not to rubber-stamp the President’s request.
“The National Assembly should not just approve that,” he warned.
“Our debt is already more than double our reserves. The debt is over $90 billion, while our reserves are just $41 billion. So when do we stop borrowing to finance our budget?”
Tella further warned that Nigeria’s debt exposure could become catastrophic if global economic conditions worsen.
“If the world economy goes into recession, we’ll be in serious trouble,” he cautioned. “It’s a big problem for us.”
Echoing similar concerns, Akpan Ekpo, a former director-general of the West African Institute for Financial and Economic Management, accused the Tinubu administration of operating without transparency or accountability in its borrowing practices.
“There is something they are not telling us,” Ekpo said.
“There is no transparency. The president said he is not borrowing from commercial banks, but this external borrowing is becoming disturbing.”
Ekpo noted, “While acknowledging that borrowing for ‘hard infrastructure’ is not inherently bad, Ekpo said the government’s debt profile has reached alarming levels.
“It’s getting too much,” he said.
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“Recently, the power minister was reported to be borrowing billions from China to finance power projects.
“This borrowing is getting out of hand. This president and I will not even pay for it, it’s the next generation that will bear the burden.”
He noted that the government’s contradictory fiscal posture is ‘paradoxical.’
“On one hand, you say we have met and even surpassed revenue targets. On the other hand, you are borrowing. It doesn’t add up,” Ekpo said.
“If revenue is increasing, why not use it to finance projects or adopt other models like public-private partnerships (PPP) or build-operate-transfer agreements?”