Stop the loans – Should You Pay Anyway?
Because of the current political climate in Nigeria, President Muhammadu Buhari’s request for approval to borrow extra funds is out of step with the country’s current political climate. Many people’s tongues are tingling as they consider the 33 trillion naira debt load that would descend on future generations as a result of the government’s decision to extend yet another loan. The Nigerian government has amassed a N17.06 trillion debt in the six years since President Buhari entered office, representing a 173.2 percent increase in debt since his inauguration as president in 2015.
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According to the National Assembly’s certification of the present government’s domestic debt and the budget office’s medium-term spending plan, the current administration accumulated 7.63 billion naira in domestic debt between June 2015 and December 2020.
Under the administration’s foreign borrowing plans, the country’s debt is predicted to climb from $7.3 billion in 2015 to $28.57 billion in December 2020, an increase of almost thrice.
It was revealed last week that more debt will be used to fund projects included in the federal government’s 2018-2021 borrowing plan, according to a letter from President Donald Trump dated August 24, 2021, but delivered on the House floor last week.
The World Bank, the French Development Agency (AFD), the China-Exim Bank, the International Fund for Agricultural Development (IFAD), the Credit Suisse Group, and Standard Chartered/China Export and Credit (SINOSURE) would all contribute in the $1 billion in sovereign loans proposed. Grants totaling one hundred twenty-five million dollars, with a grant component of $4,054,476,863.00 dollars. As authorized by President Buhari, loans would be made to federal and state efforts in infrastructure, health and food security as well as energy, education, and other areas of human capital development to which the funds will be channeled. in addition to the COVID-19 response actions
In response to complaints about the country’s national debt as a proportion of GDP, Nigerian government officials have insisted that the country’s national debt is not excessive (GDP). Our national debt is predicted to amount for 36 percent of our GDP by 2020, according to projections. To put it another way, there is no evidence that our national debt has the same economic stimulant effects as debt held by other nations, as has been argued before. When it comes to national debt, China has 54.44 percent of GDP, but because it is the world’s second-largest economy, the vast majority of its debt is used to support domestic consumption rather than investment, and the vast majority of its debt is used to finance the country’s infrastructure rather than finance the country’s infrastructure. export. Despite the fact that Germany has a high national debt-to-GDP ratio, the German economy is today the most robust in the EU. Thus, the economies of China and Germany have profited from their respective levels of indebtedness and borrowing.
Because of this, the economy will be in a stronger position.
Currently, debt consumes a significant percentage of Nigeria’s income, which has had a detrimental influence on the country’s economy and now accounts for a majority of the country’s revenue. Due to the fact that debt repayment takes priority above all other considerations, Nigerians are being compelled to make unreasonable sacrifices. Funds from bilateral loans, particularly those for infrastructure projects, would be diverted away from the development of Nigeria’s stock market and instead used to purchase equipment from the nations who gave the money. Lending nations get more benefits from loans than the rest of the world’s economy as a whole.
According to experts, debt may be beneficial when it is utilized to boost exports rather than domestic consumption. In spite of the fact that it is 90 percent complete, the Ajaokuta Steel Company has been on life support since the early 1980s. Sources say that a portion of the present financing will be used to resurrect the company’s operations. It is urged that this be done in order to guarantee that the government’s loan funds be used appropriately to boost steel production for both home and international markets. If the borrowing does not result in an improvement in the economy, future generations will be trapped in slavery because they will be obligated to pay back the money they have borrowed. Therefore, we must use caution in the collection of debts, as has been the case throughout the history of the country.
Prior loans, if they had resulted in economic progress, would have transformed Nigeria into a developing country comparable to Brazil, South Korea, and other Asian countries such as India and Pakistan. Since the 1970s, when the countries first began cooperating on economic development efforts, Nigeria has maintained strong ties with these other countries. Our conservative approach to economic growth has resulted in our inability to complete the execution of initiatives and projects for which we have received financial support. Corruption hampered the implementation of certain initiatives while others were never brought to fruition at all due to overspending or corruption. Nigeria is not making progress in this manner.
We urge the government to cut public expenditure and reign in politicians’ extravagant lives in order to reduce our indiscriminate dependence on outside money for practically every planned activity. A callous act of government is borrowing money to create infrastructure as politicians plan expensive weddings and funerals while living on little or no income. Nigerian politicians borrow money to fund initiatives, although it is not typical for them to distribute money at social gatherings or other public gatherings. To prevent borrowing from international and bilateral organizations, the government should focus on closing budget shortfalls generated by public officials in order to avoid draining money from the Commonwealth of Independent States. The government is also required to declare any loans that have been taken out with third parties. In addition to the repayment timetable and interest rates, this document should mention the amount of money that the nation will be required to repay the loan in full. We should not be imprisoned because of unjustified financial obligations.