Candidate of the Labour Party (LP) in the 2023 presidential election, Mr Peter Obi, has chided the President Bola Tinubu administration over its ‘huge’ borrowing, saying particularly that the administration’s continuous securitisation of Ways and Means borrowing from the Central Bank of Nigeria (CBN) is against the law and the CBN Act.
Obi insists that the Tinubu administration is flouting the CBN Act which stipulates that the limit of the Federal Government’s borrowing from the CBN should not exceed five percent of the previous year’s revenue.
Making reference to the president’s recent request to the National Assembly to approve the securitization of N7.3 trillion being the outstanding debt the Federal Government owed the CBN, Obi argued that the CBN Act stipulates that all borrowings under the Ways and Means cannot be converted to debt or securitized if the CBN is the underwriter.
He added that the law also requires the liquidation of the outstanding borrowing before any new advancement can be made.
These are contained in his remarks entitled: ‘Debt and Waste as Economic Policy’, at the Convention Igniting the Voices of Africa, held in Accra, Ghana.
Obi said it was baffling that the National Assembly approved of the “illegal”scrutinisation side by side the borrowing of another $7.8billion and €100million.
He said: “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. In seven years, CBN lending to the Buhari government had climbed 2700% 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 securitization 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 securitization of N7.3 trillion being the outstanding debt owed to the Central Bank of Nigeria (CBN) by the Federal Government of Nigeria.
“Specifically, the continuous securitization of Ways and Means borrowing from the CBN is against the law and against the CBN Act which stipulates the limit of the Federal Government’s borrowing from the CBN not to exceed 5% of the previous year’s revenue.
“More importantly, the CBN Act expressly states that all borrowings under the Ways and Means cannot be converted to debt or securitized if the CBN is the underwriter.
“Almost at the same time as the illegal securitization was approved by parliament, the president also sought and secured National Assembly approval to borrow another $7.8 billion and €100million. No questions asked. No explanations were sought as to the precise purpose of these borrowings all within the seven-month tenure of this government.”
He warned that if that trend of borrowing is unchecked, the nation’s economy will not only run into more turbulent waters economy-wise but will be wreck altogether.
Obi also decried the present unsustainable debt just as he chided the government for branding its borrowing as being for ‘capital’ expenditure without specifically stating what capital projects.
“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?
“I am afraid that the current administration is not paying sufficient attention to issues of rational economic management.
“Instead, an unsustainable level of debt is being piled upon the economy thereby further burdening our already distressed populace who are bearing the burden of harsh economic policies not backed by compassionate cushioning policies,” he added.
He said this trend of lavish spending backed only by equally lavish borrowing is unsustainable and will wreck the economy in due course, if not halted.
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