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Group blasts Governors over mad rush for foreign loans
_________________________________________________________
By Eric Ojo
Sunday, Jan 13, 2012
Sunday, Jan 13, 2012
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The Civil Society Legislative Advocacy Centre (CISLAC), an Abuja
based non-governmental organisation (NGO) has blasted State
Governors in Nigeria over what it termed as their sudden crave for
foreign debts.
The centre said the development portends danger for sustainable
development in the country, reducing the options for development for
future generations of Nigerians and possessing traits of generational
inequity.
CISLAC noted that the seeming renewed rat race by state governors
to outdo each other on who borrows first and most and their posture
toward the Federal Ministry of Finance and the Senate in their quest
for external borrowings is unprecedented.
It will be recalled that under the 2012/14 Medium Term External
Borrowing Plan (revised) and the much touted pipeline projects in the
Medium Term Expenditure Framework 2012-2014, the Federal and
State Governors seek to borrow the $7.9 billion in foreign loans.
In addition, while presenting the 2012 budget proposal to the National
Assembly, President Goodluck Jonathan had lamented that the
domestic debt had been growing at an alarming rate in recent years.
“We find the development that calls for spending N591.76bn on the
servicing of domestic and foreign debts in 2013, up from 560bn in
2012 very, disheartening as this will only continue to rise. We find it
worrisome that as at September 2012 our external debt reportedly
escalated to $6.2 billion, a domestic debt profile of N6.3trn and that
the nation’s debt profile could rise as high as $25 billion by 2015.
The centre in a statement issued over the weekend, further lamented
that it is even more disturbing that in spite of the claim by the Federal
Ministry of Finance that the loans are being obtained at
concessionary rates, there are indications that at least $5.34 billion
of the $7.9 billion foreign loans will go back to the lenders in form of
interests, service charges, commitment charges and management
fees within the 10-year moratorium period alone.
“We wish to remind all the stakeholders that the arguments advanced
for this frenzy is similar to those advanced by their predecessors who
plunged the nation into the debt that necessitated a negotiation for
debt forgiveness seven years ago.
“We remind the governors that citizens are yet to trust their ability to
manage resources efficiently, prudently and transparently. As at now,
we are aware that many of the states do not have procurement laws
and fiscal responsibility laws. We also remind them that many of them
depend heavily on federal allocations and possess dismal records of
internally generated revenue and so their proposed repayment plans
at best speculations that may only further impoverish the people of
their states.
CISLAC also expressed its concern over why such crucial issues like
external borrowings are not open to public input and heralded by
debates and dialogue before they are embarked upon considering
that the burden of repayment will ultimately fall on the people.
“Loans obtained and spent are tax payers’ monies spent in advance
and the question of generational equity comes to play. Why should a
governor who has just 3 years left in office borrow millions of dollars
to be paid in 15 years without consulting those who must bear the
burden of paying both loan and interest after the gestation period?
"It is rather strange that state governors who had previously
lamented the rising debt profile of the Federal government and
condemned the renewed quest for foreign loans have joined in the
fray to engage in the same vocation. We consider the flaunting of
figures and comparisons with international of debt to GDP ratios to
justify the loans an aberration as it is obvious that a nation that
occupies the lowest levels of corruption perception index, and
notorious for wastages and patronage operates on standards that fall
short of those to whom the figures and rations apply”, the centre
further disclosed.
The centre therefore urged call State governors to re-think their
positions and jettison the idea of external borrowing and devise
creative means of generating resources to fund development without
endangering the welfare of future generations.
It also called on the Federal Government and the National Assembly
to also revisit the Medium Term External Borrowing Plan 2012-2014
and review it and open the process of external borrowings to public
debate and dialogue to engage citizens whose resources will be
deployed for subsequent repayment of the loans obtained.
Borrowings relates to issues of tax justice, generational equity and
sustainable development.
“We call on civil society and the media to embark on public
enlightenment and citizens’ education to mobilize public opinion and
enhance informed debates at all levels. National indebtedness affects
all Nigerians, our national pride, socio-economic development and
future economic welfare and well-being are at stake.
.
“The resources to be used for repayment will be from our
commonwealth, either resource revenue or taxes and the opportunity
cost of servicing the debts is the development and social services we
have to forfeit. We must therefore demonstrate interest and
commitment to ensuring that we participate in the decision making
process that leads to all forms of borrowings be they domestic or
external”, CISLAC stressed.
based non-governmental organisation (NGO) has blasted State
Governors in Nigeria over what it termed as their sudden crave for
foreign debts.
The centre said the development portends danger for sustainable
development in the country, reducing the options for development for
future generations of Nigerians and possessing traits of generational
inequity.
CISLAC noted that the seeming renewed rat race by state governors
to outdo each other on who borrows first and most and their posture
toward the Federal Ministry of Finance and the Senate in their quest
for external borrowings is unprecedented.
It will be recalled that under the 2012/14 Medium Term External
Borrowing Plan (revised) and the much touted pipeline projects in the
Medium Term Expenditure Framework 2012-2014, the Federal and
State Governors seek to borrow the $7.9 billion in foreign loans.
In addition, while presenting the 2012 budget proposal to the National
Assembly, President Goodluck Jonathan had lamented that the
domestic debt had been growing at an alarming rate in recent years.
“We find the development that calls for spending N591.76bn on the
servicing of domestic and foreign debts in 2013, up from 560bn in
2012 very, disheartening as this will only continue to rise. We find it
worrisome that as at September 2012 our external debt reportedly
escalated to $6.2 billion, a domestic debt profile of N6.3trn and that
the nation’s debt profile could rise as high as $25 billion by 2015.
The centre in a statement issued over the weekend, further lamented
that it is even more disturbing that in spite of the claim by the Federal
Ministry of Finance that the loans are being obtained at
concessionary rates, there are indications that at least $5.34 billion
of the $7.9 billion foreign loans will go back to the lenders in form of
interests, service charges, commitment charges and management
fees within the 10-year moratorium period alone.
“We wish to remind all the stakeholders that the arguments advanced
for this frenzy is similar to those advanced by their predecessors who
plunged the nation into the debt that necessitated a negotiation for
debt forgiveness seven years ago.
“We remind the governors that citizens are yet to trust their ability to
manage resources efficiently, prudently and transparently. As at now,
we are aware that many of the states do not have procurement laws
and fiscal responsibility laws. We also remind them that many of them
depend heavily on federal allocations and possess dismal records of
internally generated revenue and so their proposed repayment plans
at best speculations that may only further impoverish the people of
their states.
CISLAC also expressed its concern over why such crucial issues like
external borrowings are not open to public input and heralded by
debates and dialogue before they are embarked upon considering
that the burden of repayment will ultimately fall on the people.
“Loans obtained and spent are tax payers’ monies spent in advance
and the question of generational equity comes to play. Why should a
governor who has just 3 years left in office borrow millions of dollars
to be paid in 15 years without consulting those who must bear the
burden of paying both loan and interest after the gestation period?
"It is rather strange that state governors who had previously
lamented the rising debt profile of the Federal government and
condemned the renewed quest for foreign loans have joined in the
fray to engage in the same vocation. We consider the flaunting of
figures and comparisons with international of debt to GDP ratios to
justify the loans an aberration as it is obvious that a nation that
occupies the lowest levels of corruption perception index, and
notorious for wastages and patronage operates on standards that fall
short of those to whom the figures and rations apply”, the centre
further disclosed.
The centre therefore urged call State governors to re-think their
positions and jettison the idea of external borrowing and devise
creative means of generating resources to fund development without
endangering the welfare of future generations.
It also called on the Federal Government and the National Assembly
to also revisit the Medium Term External Borrowing Plan 2012-2014
and review it and open the process of external borrowings to public
debate and dialogue to engage citizens whose resources will be
deployed for subsequent repayment of the loans obtained.
Borrowings relates to issues of tax justice, generational equity and
sustainable development.
“We call on civil society and the media to embark on public
enlightenment and citizens’ education to mobilize public opinion and
enhance informed debates at all levels. National indebtedness affects
all Nigerians, our national pride, socio-economic development and
future economic welfare and well-being are at stake.
.
“The resources to be used for repayment will be from our
commonwealth, either resource revenue or taxes and the opportunity
cost of servicing the debts is the development and social services we
have to forfeit. We must therefore demonstrate interest and
commitment to ensuring that we participate in the decision making
process that leads to all forms of borrowings be they domestic or
external”, CISLAC stressed.
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