Two elements stand out in the 2015 Federal Government budget which, aside being difficult to ignore, speak to the inverted priorities of the Jonathan administration. The first is the capital spend for the year put at N387 billion – a paltry 8.9 percent of the total outlay – (the initial figure announced by the finance minister, Ngozi Okonjo-Iweala, in her budget presentation last month was N634 billion). The second is the whopping N943 billion voted for debt servicing this year – a figure which comes to more than 20 percent of the N4.357 trillion budget.
If it seems necessary to restate the thrust of our earlier editorial on the subject last week, it is that spending 91.1 percent to service the bureaucracy that is at best an indolent one at this time of acute deficit in infrastructure – the critical enablers needed to power the stuttering economy to growth – is, to put it mildly, bad for the political economy.
But then, no less confounding is the N943 billion voted for debt servicing in the current year. Of course, we knew that a moment such as the nation is currently experiencing would come sooner or later. That was why we alerted the administration to the wisdom of spending within its means over the course of several editorials, as well as on the danger of a relapse to the past habits which landed the nation in debt peonage.
Of course, we were roundly ignored. When we raised questions about the wisdom of borrowing when oil prices held steady and high, the administration’s hierarchs not only rationalised their appetite on the grounds that the nation was under-borrowed; and to drive their point home, they advertised the low Debt-GDP ratio as if that is supposed to be a licence to ratchet dubious debts.
Today, our fears have been confirmed. From an external debt stock of US$4.26 billion in June 2010, the Federal Government’s external debts stock had ballooned to US$6,445,631,547.93 as at December 31, 2014. The situation of domestic debts is even worse: from N3.76 trillion in June 2010, it has grown to a humongous N9.53 trillion by December 2014 – unfortunately, with very little to show for it in terms of projects.
As it appears, the illusion of an invincible economy, one reasonably insulated from macro-economic shocks has since evaporated – no thanks to the dip in oil prices; worse, the fears have returned to haunt.
As one would imagine, the administration appears to have learnt nothing from the experience. In the current budget cycle, for instance, it seeks $5.7bn (N2.97tn) from external sources – under the guise of using same to finance infrastructure projects.
Of these, $100m (N16.8bn) is expected from the World Bank; another $800m (N135.4bn) is expected from both the African Development Bank and the Islamic Development Bank for the East-West Road Project, while $4.8bn (N806.4bn) is expected from China Exim Bank for the Mambilla Hydro Electric Power Project. These are aside the $12bn under negotiation from the Chinese for the coastal rail project.
The point really is that the administration has neither demonstrated the fiscal rectitude nor the acuity to convince Nigerians that the loans – or any loans for that matter – can ever be well utilised. They would wish that they could point at specific projects for which the earlier loans over which they are now saddled with the burden of repayment were deployed.
While borrowing has since become the second nature for the administration, the greater task, which it has proven unable to undertake – is clean up and eliminate wastes in government; and to capture all revenues due to the federation account, particularly the operating surpluses of the countless agencies and parastatals of the Federal Government. While the two steps may not entirely eliminate the appetite for debts, it would at least reduce both the craving for, as well as the burden of debt.
