Sep 20, 2021

Mawazo Writing Africa

Writing about the main

Buhari overlooks N33tr debt burden, seeks fresh N2tr loans

Amid concerns over debt overhang, President Muhammadu Buhari has called on the Senate to review and approve an approximately N 2.5 trillion external credit plan to fund projects captured under the 2018-2021 credit projections. If approved, the country’s documented national debt will rise to over N35 trillion.

The President of the Senate Ahmad Lawan read out the letter of August 24, 2021 during the plenary session in Abuja yesterday.

In the letter, Buhari stated that the projects listed in the Federal Government’s 2018-2021 credit plan were supported by state loans from the World Bank, the French Development Agency (AFD) and the Export-Import-Bank are to be financed by China, International Fund for Agricultural Development (IFAD), Credit Suisse Group and Standard Chartered / China Export and Credit (SINOSURE).

The amount is $ 4.05 billion, € 710 million and a grant component of $ 125 million. The money, the president said, would be used to fund federal and state government projects in key sectors such as infrastructure, health, agriculture and food security, energy, education and human capital development, and the COVID-19 response initiative

Despite rising debt, official documents reviewed by The Guardians suggest the federal government is aggressively pursuing a longer-term debt program that increases the maturity of the currently secured loans to 10-30 years.

Refinancing short-term loans has, according to official documents, become a strategic part of current national debt management.

While there is no official information on the proportion of maturing debt that is being refinanced, said Godwin Owoh, professor of applied Economics and debt management consultant that it would be 85 percent.

The Debt Management Office (DMO) acknowledged in the 2019 Annual Report and Accountability Report published yesterday that the short-term refinancing of longer-term loans is in line with the medium-term debt management strategy 2016-2019 and that its success in this context is a significant improvement in the debt management approach .

“The strategy of long-term borrowing and restructuring of the domestic debt portfolio by refinancing maturing Treasury bills with securities with longer maturities extended the yield curve of Bunds to up to 30 years within the reporting period and was crucial for the success achieved,” said DMO in the appreciation.

At the top of the DMO agenda is to keep the average remaining term (ATM) for the entire public debt portfolio at at least 10 years.

Basically, long-term loans are recommended for growing companies aiming for stable planning and growth. However, experts fear that extending the due dates of Nigerian debt will mean postponing the proverbial bad day N 31 trillion was spent on investment / development.

A breakdown of the amount showed that N 953.620 billion and N 1.475 trillion were spent on debt servicing in 2015 and 2016, while N1 was spent in 2017 and 2018, respectively .841 trillion and N2.203 trillion went into the same item.

The figures were presented in the “Analysis of the 2022-2024 Medium Term Expenditure Framework and Fiscal Strategy Paper” published by the Center for Social Justice ( CSJ) in Abuja.

In 2019 and 2020, amounts of N 2.254 trillion and N 2.951 trillion were spent on debt servicing. The five-year debt servicing profile of N11,679,845,205,997 (2015-2020) also averaged N1.386 trillion for the year.

Organization at the forefront of the campaign for fiscal discipline and transparency in public affairs, stated that Nigeria’s debt has been since 2015 have increased in double digits year on year, with the highest increase recorded between 2015 and 2016. Citing DMO statistics, Onyekpere found that public debt was N12,603 ​​trillion in 2015, N 17,360 trillion in 2016 and N 21,725 ​​trillion in 2017. In 2018, 2019 and 2020 the public debt was 24N 0.387 trillion, 27.401 trillion N and 32.915 trillion respectively.

The highest increase was between 2015 and 2016. Between 2015 and 2020 the national debt of Nigeria increased 161 percent, an average annual increase of 37.74 percent. p>

THE opposition Peoples Democratic Party (PDP) has rejected the steps of the All Progressives Congress (APC) government led by President Buhari, Nigeria with a new 2.66 trillion N (4 billion US dollars and 710 million euros) to pledge. external loan. The party expressed fears that “with President Buhari and the APC’s ruthless borrowing, Nigerians may not have a nation and fortune to own freely after the APC, which has less than two years in office to leave, retires ”. Government. “

The PDP complained that given the N33.107 trillion debt already accumulated by President Buhari and the APC, Buhari proposed an additional borrowing of 5.62 trillion for the 2022 budget N and now new N 2.66 trillion foreign loans will hang the nation’s APC N40 trillion in debt with no clear repayment schedule.

A statement by PDP National Public Secretary Kola Ologbondiyan sounded the alarm “The debt” that APC hangs on Nigerians for nebulous projects whose scope, facilities, locations, and contractors are largely vague, a development that confirms fears of huge fraud against our nation at the expense of innocent Nigerians, including the generation as yet unborn . “

The statement reads:” Our party considers it an act of malice that individuals who know they are in less than z two years out of office, accumulating debt instead of looking for ways to reduce the liability they have placed on our nation.

“The APC knows they will be gone after May 29th will be there. 2023. That is why it is pushing our nation into deeper economic swamp with foreign credit, largely diverted into the personal pockets of its corrupt leaders. “

The PDP noted that” in the face of their incompetence “Corruption and Manifestation” a casual attitude towards the plight of Nigerians, the APC and its administration have shown no commitment to wealth creation as expected from good government.

“Rather, they have ruthless credit recorded and plundered our national vault and oppression of our p productive sectors; a development that has paralyzed our gross domestic product (GDP) so badly that our naira, which the PDP handed over to the APC at N167 at one dollar, has now plummeted to a gloomy all-time low from N557 to one dollar at the APC. “

The PDP called on the National Assembly to save the nation by rising above partisan sentiments to reject President Buhari’s recent request for a new foreign loan.

The party also called for that National Assembly to Immediately “Open an Open Investigation Hearing on All Loans Collected by President Buhari”.

In the new proposal, the President claimed that projects to be funded with the new loans in the country’s six geopolitical zones would create jobs, reduce poverty and protect the most vulnerable.

IN THE MIDDLE, Lagos State is the first subnational government to activate the framework for the release of Nigeria’s $ 1 trillion Green Bond Market Development Program to fund major infrastructure projects. Governor Babajide Sanwo-Olu yesterday signed a Memorandum of Understanding (MoU) with FMDQ Group and Financial Sector Deepening (FSD) Africa, which is the program’s implementing partners for the proposed N25 billion (over $ 60 million) funding In a statement, the event at the State House in Marina took place less than 24 hours after Lagos was upgraded from AA + (nga) to AAA (nga) by Fitch International for the good standing of the state Debt sustainability and resilience.

Sanwo-Olu said the green bond program, supported by the UK Agency for International Development (UK Aid), would increase the state’s capacity to carry out more critical infrastructure and social projects To deliver that would keep Lagos alive the path of prosperity.

Launched in 2018, the Green Bond Market Development Program aims to develop a green bond market Facilitate bonds to support broader bond capital market reforms that will impact the country’s government and non-government bond markets.

Sanwo-Olu said the MoU was the crucial first step by Lagos to achieve a create viable financing option for future green and sustainable projects. The funding opportunity, he said, will drive the adoption of innovations and technologies to create green jobs, thus promoting economic and climatic resilience.

Finance Commissioner Dr. Rabiu Olowo said Lagos had 20 years of experience in the procurement of bonds, which implementing partners and capital market operators guarantee the state’s commitment to the conditions highlighted in the framework.