N31trn Debt: Senate President Cautions Buhari Against Excessive Borrowing

Senate President, Ahmad Lawan, has cautioned the President Muhammadu Buhari-led administration against excessive borrowing so that the country does not end up spending most of its revenue on debts servicing.

Lawan’s caution to the administration came after the Senate passed the 2021-2023 Medium Term Expenditure Framework and Fiscal Strategy Paper on Wednesday, ahead of President Buhari’s presentation of the 2021 Appropriation Bill to the National Assembly.

As a way to save cost, the Senate President also recommended the merging of some agencies of government as one.

Speaking in a statement by his special assistant on press, Lawan urged the Buhari-led administration to explore untapped opportunities to fund infrastructural projects.

He said, “We need to put up a lot of effort to ensure that these revenue generating agencies do their work promptly, efficiently and effectively.

“Where they have challenges, we must help them. Like most of us said, borrowing needs to be carefully applied here. There are projects that I feel we should ensure we don’t borrow to fund.

“We should explore other opportunities in sourcing funds such as the Build-Operate-Transfer (BOT), Public Private Partnerships and so many other options. I think we should explore on those so that we minimize the borrowing.

“There are lot of businesses that have interest in the development of our infrastructures, so we should explore the other means.

“But then again, we cannot eliminate borrowing, that is the sad part of it. I think in the past we deluded ourselves into thinking that Nigeria is the richest country in the world, meanwhile we are not developing our infrastructure.

“If we had applied whatever we had then, especially in our good years, we would have found that we wouldn’t have any money to spare to call ourselves rich.

“We need to look at the possibility of reducing the kind of borrowing we do in order to ensure that we don’t accumulate so much deficit and end up spending so much of our revenue servicing debts,” he said.

The Senate President who bemoaned the high recurrent expenditure profile of government, underscored the need for the merger of agencies so as to reduce cost of governance.

“Whenever we talk of cost of governance, we think of how to merge the different agencies.

“I think there is need for us to muster the political will, because we know what to do, but when it comes to doing the right thing, we find it difficult to do it.

“I think the time has come for government to do so, and government includes us, to address this issue.

“There are so many agencies, and these are agencies that were created to address specific challenges at the time.

“Now, they are irrelevant. They are simply conduits that are given money every year, while they have no value to add to governance.

“We need to really work closely with the Executive arm of Government. I know it is going to be a tough call, because it will be said this is not a time for people to lose their jobs, but somehow we need to find a way out of this as the cost of governance is high,” Lawan said.

Meanwhile, President Buhari is expected to present the 2021 Appropriation Bill to a joint session of the National Assembly on Thursday.

In passing the 2021-2023 MTEF/FSP, the Senate adopted the report of the Joint Committee on Finance; and National Planning and Economic Affairs.

The report was on Wednesday presented to the upper legislative chamber by the chairman of the joint committee, Solomon Olamilekan Adeola, who is the senator representing Lagos West.

The Senate adopted 20-point recommendations of the committee and arrived at the following decision:

• That the federal government retains revenue of N7.89 trillion of the total proposed expenditure of N13.08 trillion in the 2021-2023 MTEF/FSP.
• The Senate also approved the fiscal deficit of N5.19 trillion and borrowings of N4.28 trillion, including foreign and domestic borrowings.
• Others are statutory transfers, totalling, N484.4 billion, debt service estimate of N3.12 trillion, while sinking fund to the tune of N220 billion was also approved.
• It also approved pension, gratuities and retirees benefits of N520.6 billion and Federal Government aggregate expenditure of N13.08 trillion.
• The expenditure is made up of total recurrent (Non-debt) of N5.66 trillion; Personnel Costs of Ministries Departments and Agencies (MDAs) of N3.05 trillion.
• It includes capital expenditure (exclusive of Transfers) of N3.58 trillion, Special Intervention (recurrent) amounting to N350 billion and special intervention (capital) of N20billion.
• The Senate also approved daily crude oil production of 1.86mbpd for 2021; 2.09mbpd for 2022; and 2.38mbpd for 2023, to ensure greater budget realism and disruptions due to attacks, sabotage in the Niger-Delta which had substantially abated for a while.
• The Senate also approved that the benchmark oil price of 40 dollars per barrel should remain because of the clear evidence of wide consultations with key stakeholders.
• It also approved the exchange rate of N379 dollars proposed by the executive for the 2021-2023, based on the determination of the Central Bank of Nigeria (CBN) to pursue unification around its rate over the medium term, where investors and exporters transact dollars at market determined prices.
• It also approved the projected Gross Domestic Product (GDP) growth rate of 3.00 per cent, given the Federal Government’s response via fiscal policies adapted to contain the damage of COVID-19, including the N500 billion stimulus fund.
• It also approved the projected Inflation rate of 11.95 per cent among other recommendations.