Former President Olusegun Obasanjo has responded to the Federal Government's decision to seek more loans, saying it is criminal to borrow to accrue debt for future generations.
On the sidelines of an event in South Africa, Obasanjo told Channels Television that if the present debt is not serviced or paid, it may become an issue for future governments.
Borrowing is not an issue, according to the former Nigerian leader, but what is a problem is what one is borrowing for and the plan or capacity to repay.
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It is, however, illegal to borrow and accumulate debts for the next generation and the generation after that. “What are you borrowing for?” says the narrator. Obasanjo inquired.
“It is the height of stupidity to borrow for recurring spending. It's reasonable to borrow money for initiatives that will pay for themselves. Then there's the question of payment: how long will it take for it to pay for itself?”
During his presidency in 1999, the government spent $3.5 billion servicing debts that continued to grow, according to the ex-president.
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When I first took office as President, we were paying $3.5 billion on debt service. Even nevertheless, the size of our obligations did not decrease.”
Nigeria's debts have risen as the government seeks international financing to complete critical infrastructure projects.
President Muhammadu Buhari wrote to the National Assembly five days earlier, requesting authorization to borrow new funds totaling $4,054,476,863 and €710 million as part of the 2018-2020 borrowing strategy.
In the letter, the President noted that there is a need to generate extra cash for some "important projects" due to "growing demands," while also requesting that the parliament approve grant components totaling $125 million.
The request was made in a letter read aloud on the Senate floor by Senate President Ahmad Lawan on Tuesday.
The national legislature authorized the $8.3 billion and €490 million loans included in the initial borrowing plan for 2018-2020 in July.
