Former Anambra State Governor, Mr Peter Obi has said the Federal Government is not following due process in seeking loan approval from the National Assembly.
Obi who was the candidate of the Labour Party (LP) in last year’s presidential election, said the Central Bank of Nigeria (CBN) Act has been flagrantly violated in the process.
He equally accused the National Assembly of not scrutinising the loan applications from the executive before giving its approval.
Obi in an article titled “Debt and Waste as Economic Policy,” condemned the National Assembly’s approval of the N7.3 trillion loan request for President Bola Tinubu before considering the 2024 fiscal budget.
He recalled that “Barely 26 days to the end of its eight-year tenure, the Buhari administration got the Senate to approve a N22.7 trillion Ways and Means borrowing from the CBN.”
The former Anambra State governor in a statement by his media aide, Michael Nwolisa, noted that CBN’s lending to the Buhari government in seven years amounted to 2700 per cent, which he said, was in flagrant violation of the CBN Act.
“Indifferent to the illegality of the excessive Ways and Means borrowing, the National Assembly still approved the new Tinubu administration’s request for an N7.3 trillion securitisation of the existing Ways and Means facility just before considering the 2024 budget proposals.
“On the 30th of December 2023, the last working day of the year 2023, shockingly the president requested the National Assembly to approve the securitisation of N7.3 trillion being the outstanding debt owed to the Central Bank of Nigeria (CBN) by the Federal Government of Nigeria.
“Almost at the same time as the illegal securitisation was approved by parliament, the president also sought and secured National Assembly approval to borrow another $7.8 billion and €100 million.
“No questions asked, no explanations were sought as to the precise purpose of these borrowings all within the seven-month tenure of this government,” Obi wondered.
He stated that minimum public accountability requires that the president and his administration should offer more specific explanations about the purpose of these borrowings.
“But so far, all we have been told is that these borrowings are meant to fund ‘capital’ expenditure,” he said.
The former LP flag bearer maintained that the continuous securitisation of Ways and Means of borrowing from the CBN is against the law, which stipulates that the limit of the Federal Government’s borrowing from the CBN should not exceed five per cent of the previous year’s revenue.
“The law also requires the liquidation of the outstanding borrowing before any new advancement can be made,” he stated.
According to him, “the CBN Act expressly states that all borrowings under the Ways and Means cannot be converted to debt or securitised if the CBN is the underwriter.”
He warned that the idea of securitisation of illegal borrowings from the CBN and transferring the same into debt stock portends danger to the future of the nation’s economy.
“It increases the debt burden of the nation. It is even more worrisome because these accumulations of debts are not being transparently and productively utilised or accounted for.
“While this new debt of N7.3 trillion has been hurriedly approved without scrutiny by the National Assembly, the immediate public accountability question is: can the Federal Government, which holds the trust of the people, tell us what they used N7.3 trillion to do?
“We have always been told that all borrowings are for ‘capital’ projects, can we know the capital or productive projects this huge borrowing is being applied to?
“This level of borrowing within the short period of the present government is far worse than what was accumulated under the previous administration and more than what was borrowed under President Jonathan’s entire tenure.
“What is emerging is a disturbing pattern of huge borrowing and profligate spending on nonessential procurements which are being termed ‘capital’ expenditure and are being funded with an accumulation of debts,” he said.
Obi observed that a good number of these so-called ‘capital’ expenditure items as contained in the 2024 budget are more procurement and luxury projects.
“The newly signed 2024 budget includes many such frivolous items of expenditure. The sum of N3 billion is budgeted for books for the library of the NASS, a sum far over the allocation for the National Library which is still operating from a poorly maintained rented accommodation while its permanent structure remains under construction for decades.
“A princely sum of N6 billion is budgeted for a new car park at the National Assembly, probably to accommodate the new fleet of N160m piece SUVs for legislators.
“This trend of lavish spending backed only by equally lavish borrowing is unsustainable and would wreck the economy in due course. It needs to be halted,” he advised.
The former governor warned that “Unless this trend is halted, the nation runs the greater risk of running into more turbulent economic waters in the next couple of months.”
