A civil society organization, CSO, Centre for Social Justice, Equity, and Transparency, CESJET, has backed President Bola Tinubu’s request to borrow $2.2 billion to fund capital projects.
DAILY POST reports that the Senate on Thursday approved Tinubu’s request for a fresh $2.2 billion to partially finance the N9.7 trillion budget deficit for the 2024 fiscal year.
In the request letter sent to the National Assembly, Tinubu had explained that the loan was integral to his administration’s fiscal strategy for the coming year.
The loan request attracted criticism from several quarters, with some Nigerians urging the National Assembly to reject the loan.
Speaking on the President’s loan request during a press briefing in Abuja on Thursday, CESJET said the funds are essential to the advancement of revenue-generating plans and institutional improvements.
The Convener of CESJET, Emeka Theodore, who addressed journalists, faulted calls for the rejection of the loan by the National Assembly.
According to him, the calls for the rejection of the loan are not based on national interest.
“We are gathered here today, to discuss a matter of vital importance to the development and prosperity of our country: the Federal Government’s planned loan request of $2.2 billion. This initiative has seen a lot of pushback in recent weeks, most of it being misguided and uninformed.
“Evidently, it is important to understand that the oppositions to the borrowing plan is obviously unwarranted and counterproductive to Nigeria’s development.
“In setting the record straight, it requires us to address the baseless complaints made of this loan while emphasizing its benefits and justification it would do to our great country,” Theodore said.
Justifying the $2.2 billion loan, CESJET noted that Nigeria is one of the few countries that have continuously fulfilled its financial commitments to foreign creditors.
“Through a strategic and structural plan in executing loan servicing, the President Tinubu led-administration has maintained repayment schedules and built confidence with foreign lenders.
“For example, income generating reforms have been used to carefully control the 2023 debt service-to-revenue ratio, despite the fact that it is still worrisome.
“It is noteworthy stating that fulfilling these responsibilities has not only maintained Nigeria’s reputation, but it has also increased foreign financial institutions’ trust in our capacity to carefully manage borrowed money. Nigeria continues to benefit from favorable rates on development funding and concessional loans because of this confidence.”
CESJET reminded critics of the loan that loans collected by government in the past have been used for important development initiatives, infrastructure growth, and institutional changes.
The civil society organization further noted that the judicious use of loans to promote economic growth and address infrastructure deficiencies is demonstrated in projects like the Second Niger Bridge, the Lagos-Ibadan railway, and the ongoing Mambilla Hydropower Project.
“This proposed $2.2 billion loan is not unusual; its goal is to fund vital industries that would help Nigerians in the long run.
“In dispelling the myth on the borrowing-to-federal budget ratio, we wish to state categorically that, Nigeria’s borrowing plans are clearly in line with international best practices and do not impose an excessive cost.
“For example, a fiscal deficit of about N8 trillion is expected in the 2025 budget, which is estimated to be around N34 trillion. A manageable portion of current budget, the $2.2 billion loan fits the government’s fiscal policy to strike a balance between development requirements and long-term financial viability.
“Comparatively, the International Monetary Fund (IMF) recommends that developing economies have a debt-to-GDP ratio of not more than 55%. Nigeria’s debt ratio of about 35% puts the country in a better situation than that of other African peers, such as Ghana and Kenya, whose debt ratios are more than 60%. Nigeria has the financial capacity to borrow responsibly, as these numbers demonstrate.
“However, some critics have attempted to sabotage this important project. It is depressing to observe that their ideas frequently lack basic economic reasoning and instead rely on populist hyperbole. To propagate false information, some organizations have been enlisted to paint Nigeria’s borrowing as irresponsible and unsustainable.
“These organizations lack a thorough grasp of the economic forces at work and are frequently supported by anti-progress elements. Opposing politicians should give up their populist stance and accept the realities of government for the benefit of the country.
“It will be in the good interest of the nation for opposing lawmakers to abandon their populist approach and embrace the realities of governance. Clearly, their opposition runs the risk of sabotaging Nigeria’s growth, delaying the country’s advancement and leaving important projects underfunded.”
Urging Nigerians to support the Tinubu administration, CESJET added, “Evidently, public support is crucial for the successful implementation of development projects.
“The $2.2 billion loan proposal is clearly a necessity for Nigeria’s progress. Rejecting this proposal would be self-defeating, compromising current initiatives and endangering the future of the country.
“In light of this, we urge National Assembly members to put the interests of the country above populist digressions. A better future for all Nigerians is at stake when the loan is approved; it is not just an economic choice, but a mission to save generations.”
‘Necessity for Nigeria’s progress’ – CESJET backs Tinubu’s $2.2bn loan request