Former President Olusegun Obasanjo has reacted to the Federal Government’s plan to source for fresh loans, saying borrowing to accumulate debt for the next generation is criminal.
Speaking to Channels Television on the sidelines of an event in South Africa, Obasanjo noted that if the existing debt is left unserviced or unpaid, it might become a problem for successive administrations.
President Muhammadu Buhari is seeking the approval of National Assembly to borrow another $4 billion ($4,054,476,863) and €710 million loans from bilateral and multilateral organisations to fund the deficit in 2021 budget.
In the letter to NA, the President explained that owing to “emerging needs”, there is a need to raise more funds for some “critical projects”, while seeking the parliament’s nod to also approve grant components of $125 million.
Read Also: Buhari Seeks NASS Approval To Borrow Fresh $4bn, €710m Loans
While noting that borrowing is not a problem, the former Nigerian leader stated that what could be a problem would be what one is borrowing for and the plan or capacity to pay back.
Obasanjo asked;
But if you are borrowing and accumulating debts for the next generation and the next generation after them, it is criminal. What are you borrowing for?.
If we are borrowing for recurrent expenditure, it is the height of folly. If we are borrowing for development that can pay for itself, that is understandable. Then the payment, how long will it take to pay itself?
Obasanjo recalled that during his tenure in 1999, the country was spending $3.5 billion to service debts that kept on increasing.
He stated;
When I came into government as elected President, we were spending $3.5 billion to service debts. Even with that, our quantum of debts was not going down.
Nigeria’s debts have continued to rise as the Federal Government seeks foreign loans to deliver key infrastructural projects.
Read Also: Senate Approves Buhari’s $6.1bn Foreign Loan Request
In July, the national assembly approved the sums of $8.3 billion and €490 million loans contained in the initial 2018-2020 borrowing plan.
