2016 Budget: Buhari Planning To Borrow N5bn Daily – PDP •Challenges APC Govt To Public Debate
The opposition Peoples Democratic Party, PDP, has accused the President Muhammadu Buhari administration of planning to borrow at least N5 billion daily to finance the N6.08 trillion 2016 budget presented to the National Assembly last week.
The PDP had in its first reaction to the 2016 budget proposal, described the document “as a big fraud and executive conspiracy tailored towards mortgaging the future of the nation”.
The opposition party had also queried the Buhari administration’s decision to borrow N2 trillion, the biggest in the history of the nation, as the “height of recklessness and deceit from a government that trends on propaganda”.
Exactly a week after the budget was presented and in a follow-up to its initial reaction, the PDP said a breakdown of the N1.84 trillion, which represents the budget deficit, to be borrowed by Mr. Buhari to fund the “budget of change”, shows that Nigeria would be borrowing N5 billion a day for the next 365 days, starting from January I, 2016, without corresponding provision for economic production and a clear repayment plan.
“Some people may be wondering why we raised an alarm about the budget. The reason is simple. When we analysed the budget, we discovered it is a misshapen attempt at a Keynesian economics of applying deficit spending to stimulate growth even when studies have proven that GDP growth rates decrease by over 50% when debt goes from low or moderate to high. But then we know the borrowing here is to pay huge campaign debt and fund a political war chest”, the PDP National Publicity Secretary, Olisa Metuh, told reporters on Tuesday in Abuja.
According to Metuh, “By every standard, this budget is a booby trap against the nation. When you break down the proposed N1.84 trillion borrowing, you discover that it amounts to borrowing N5 billion every day for the 365 days in 2016. The questions are: for what specific projects are they borrowing N5 billion per day and how do they intend to pay back?”
The PDP spokesperson insisted that President Buhari must explain to Nigerians how his government intends to repay the huge loan.
“Is it by continuous borrowing to service the interests, and does he intend to accumulate colossal debt for future generations of Nigerians?
“The truth is that this administration cannot justify this proposal. There is no known economy in the world where you can justify borrowing N1.84 trillion without specific projects and precise repayment outline.
“This is worse still in an oil-driven, mono-economy at a time crude oil is selling at $30 dollars per barrel and is speculated to go down to about $20 dollars or even lower in the next one year. The idea can only come when you diversify the economy and boost production capacity in manufacturing and other critical sectors, a direction, which the budget clearly failed to provide.
“From all indicators, the borrowing will be negative. They are driving us to be like Greece, and to plunge us into unnecessary debt”, he added.
Mr. Metuh also recalled that under the PDP administration, Nigeria was able to exit the Paris Club by securing cancellation of inherited debts, but that Buhari is now seeking to accumulate another huge debt burden for the country.
He, however, warned that no country would be ready to cancel Nigeria’s debt again.
“More importantly, we are really worried about negative economic policies of the present administration and the copying of strategies that failed in other economies.
“Recall that we had earlier alerted on the negative consequences of the retrogressive foreign exchange controls wherein this government is making it impossible for honest Nigerians to engage in free trade and regulate their personal activities.
“There seems to be the erroneous belief that the controls will create foreign exchange stability or strengthen the Naira by limiting foreign currency outflows. This policy had badly affected other countries in the recent past; including Argentina, whose new government had to reverse the policy to save their economy. Why then are we copying a policy that failed in other countries?
“In practice, the kind of crude controls the Federal Government is implementing have been proven ineffective in preventing capital flight. By limiting the local availability of foreign exchange, the controls have instead increased the demand for foreign exchange, putting greater pressure on the naira and achieving the exact opposite of what the government in its naivety believed would happen.
“The negative impacts of the ill-conceived controls include the hindering of international trade and discouraging of foreign investment”, Metuh said.
The PDP spokesman pointed out that current measures are crippling the private sector in Nigeria because businesses are being killed as a result of unavailability of foreign exchange.
Mr. Metuh, therefore, challenged the Federal Government to a public and open debate on the 2016 budget