Friday, March 29, 2024

Borrow but use judiciously – Experts warn FG

Economic and financial analysts have thrown their weights behind the Federal Government in its bid to borrow funds to power the economy, but insisted that it must put right policies in place to enable the effective and judicious use of such borrowed funds.

To them, borrowing from global financial institutions like the African Development Bank and the International Monetary Fund, among others, to finance the economy is not evil and should not be treated as one, as they insisted that no economy can survive without foreign loans.

Economist and Senior Faculty Consultant, Lagos Business School, Dr. Bongo Adi, explained that taking the country back to its green days implies that the government must be ready to stimulate economic activities in different sectors, which also implies injecting funds and getting money into the real sector, the hands of investors and consumers.

“All these put together will enhance economic activities in the country. Looking at the GDP ratio, which is still very low at the market, it is not a bad thing if government can approach the global loan market, but what we should really worry about is the judicious utilisation of any loan taken.

We need to look into budget implementation and the mechanism put in place to ensure the transmission of funds from the government to the sectors where these monies are actually required,” he stated.

To avoid the reoccurrence of diversion of loan to non-developmental purposes, another economist and a former executive director in Zenith Bank, Dr. Wale Bolorunduro, expects the government to define its purpose for borrowing before it does.

Bolorunduro said, “If we must borrow, it has to be for infrastructure that will improve our economy. We should get our revenue to go up, while we get long term financing to fix our infrastructure; but we must come to the table to identify the infrastructure and not that someone will take China EXIM loan to build airport.

Things must be prioritised and properly matched, because long term borrowing must bring optimal solution. “We should avoid error of previous administrations that borrowed to do commercial infrastructure when we can get the private sector to do that.

Our problem is not borrowing, but borrowing for wrong purposes and in the next 30 years, the future generation will be paying for that.”

Earlier, the Socio-Economic Rights and Accountability Project had written to the AccountantGeneral of the Federation, Alhaji Ahmed Idris, regarding the release of N388.304 billion Paris Club loan refunds to 35 states by the government.

SERAP’s intention was to initiate legal action against the states that diverted the funds. The nongovernmental organisation alleged that such funds were laced with corruption and mismanagement, especially with the N388.304 billion Paris Club loan refunds.

“The refunds have undermined the human dignity of workers and pensioners, facing difficult circumstances that deprive them of their capacity to fully realise their internationally recognised economic and social rights,” the NGO alleged.

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