Economic analysts have described the approval of a $486 million credit facility by the World Bank over the weekend as another journey on the path to self-destruction.
Some of them, who spoke with our correspondent in separate interviews, argued that it was not justifiable to borrow at this time when the nation was already under the burden of servicing outstanding debts and stimulating the economy.
The World Bank recently announced its approval of a $486 million credit facility to Nigeria for electricity grid improvement.
“The investments under the Nigeria Electricity Transmission Project will increase the power transfer capacity of the transmission network and enable distribution companies to supply consumers with additional power,” the World Bank said.
But a renowned economic analyst, Mr. Henry Boyo, insisted that acquiring more debts at a time the nation was already indebted would be inimical to the economy, advising that the best option for now was to stop incurring more debts.
Boyo said, “If you are already neck deep in debt, the sensible thing to do is to stop borrowing and see how you can redress the requirement you have budgeted for. We need to cut down on our expenses – take away the frivolities or reduce the amount we need to spend.
“We must reduce our borrowing, especially when you are paying 50 per cent of your revenue to service debt. If you have to borrow, it means you are compounding your already existing debt and you have not created a link for servicing those debts without further borrowing.
At the end of the day, you find out that in spite of your heavy recurrent expenditure, you are actually borrowing to spend for recurrent expenditure.”
Speaking in the same vein, an economist and former lecturer at the Lagos State University, Dr. Sola Owoeye, pointed out that the Federal Government could not justify the new debt.
Though he admitted that the state of the power sector had become deplorable, he insisted that the government ought to look elsewhere to finance the sector.
He said, “We have been hearing that ghost workers have been found and that all loopholes in the system have been blocked. We also heard the value of money collected from looters, but the unfortunate thing is that the recurrent expenditure never falls down as we continue to borrow to service debt.
“Clearly, it is not sustainable to pay 50 per cent or more of your aggregate revenue to service debt. You cannot manage that, especially when you take a step further to enter into the realm of madness by saying you are going to borrow from abroad to service local debt.
“Nigeria needs about $100 billion to fix power alone and we should look inwards to fund it. We should drive the economy with the private sector. The sector has infinitely elastic amount of credit available.”
Meanwhile, the recent figures from the Debt Management Office stated that the nation’s total foreign and domestic debt is currently at N19.16 trillion, from about N17.36 trillion in 2015, a situation the International Monetary Fund said was capable of sparking the nation’s indebtedness to a 24.1 per cent high of its Gross Domestic Product by 2018 and 23.3 per cent of GDP by the end of 2017.
