Fuel Subsidy: Buhari Seeks Senate’s Approval for Fresh 800 Million Dollars World Bank Loan …as budget office frowns that Nigeria has limited borrowing space

By Iyojo Ameh, Abuja

Less than three weeks to the expiration of his administration, President Muhammadu Buhari mulled borrowing a fresh 800 million dollars loan from the World Bank.

His request for parliamentary approval for the fresh borrowing was contained in a letter he wrote to the Senate which was read at plenary on Wednesday.

In the letter dated May 2, 2023 which was acknowledged as received on 10th May, 2023, President Buhari said the credit facility is needed for the National Social Safety Net Programme
(NASSP).

He said his government intends to expand shock response Safety Net support among the poor and vulnerable Nigerians and the government will make a cash transfer of five thousand naira (N5,000) each to 10.

The President informed the Senate that the Federal Executive Council has already given him the go ahead to borrow the money.

Buhari’s request letter as read by the Senate President, Ahmad Lawan read
“It is with pleasure that I forward the above subject to you. Please note that the Federal Executive Council (F EC) approved an additional loan facitity to the tune of USD800 million to be secured from the World Bank, for the National Social Safety Net Programme
(NASSP) and the need to request for your consideration and approval to ensure early implementation (Copy of FEC Extract attached).

“The Senate, may wish to note that the Programme is intended to expand coverage of shock responsive Safety Net support among the poor and vulnerable
Nigerians. This will assist them in coping with the costs of meeting basic needs.

“You may wish to note that, the Federal Govemment of Nigeria under the conditional cash transfer window of the programme will transfer the sum of N5,000 per month to 10.2 million poor and low-income household for a period of six months with a multiplier effect on about 60 million individuals. In order to guarantee the credibility of the process, digital transfers will be made directly to beneficiaries’
account and mobile wallets.

“The NASSP being a social intervention programme will stimulate activities in the informal sector, improve nutrition, health, education and human capital development of beneficiary households.

“Given the above, I wish to invite the Senate to kindly approve an additional loan facility to the tune of USD8OO million to be secured from the Wortd Bank for the National Social Safety Net Programme (NASSP).

“While hoping that these submissions will receive expeditious consideration by the Senate, please accept, Distinguished Senate President, the assurance of my highest regards.”

However , the Director General, Budget Office of the Federation , Mr. Ben Akabueze earlier in the day lamented that Nigeria is trouble as the nation is fast exceeding it’s limited borrowing space.

Akabueze spoke at the Induction of newly elected lawmakers of the 10th National Assembly at the International Conference Centre, Abuja.

He said the country has one of the lowest Gross Domestic Product (GDP)Nigerian Tribune noted that the Senate has not yet take any legislative step on the letter to debt ratio in the world.

He said “while the size of the FG budget for 2023 created some excitement, the aggregate budget of all government in the country amount to about 30 trillion naira. That is less than 15 percent in terms.of ration to GDP. Even on the African continent, the ration of spending s about 20 percent. South Africa is about 30 percent, Morocco is about 40 percent and at 15 percent, that is too small for our needs.

“That is why there is a fierce competition for the limited resources. That can determine how much we can relatively borrow. We now have very limited borrowing space, not because out debt to GDP is high, but because our revenue is too small to sustain the size of our debt. That explains our high debt service ratio.

“Once a country’s debt service ratio exceed 30 percent, that country is in trouble and we are pushing towards 100 percent and that tells you how much trouble we are in. We have limited space to borrow.

“When you take how much you can generate in terms of revenue and what you can reasonably borrow, that establishes the size of the budget. The next thing would be to pay attention to government priority regarding what project gets what.

“The budget is not a shopping list. In the last the budget only contained expenditure”.

Akabueze also berated the nation’s budgeting system saying Nigeria has no organic budget law.

“The federal government of Nigeria does not have an organic budget law. It is really unfortunate that we don’t have an organic budget law. Hopefully, there is one in the work in the 9th Assembly and may be passed before the Assembly winds up. Better BG a Nigerian myself,

“I don’t know any serious country in the world that does not have an organic budget law.

“Each country has to determine its budget system that works for it. Budget is multi dimensional in coverage. One, it is political because it allocate scarce resources of the country among multiple competing and sometimes, competing interest.

“It is also an economic document because it help as the primary fiscal instrument for stimulating economic growth, ensuring employment and maintaining economic stability. It is an accounting document and provides a ceilings a d is legally binding for government to operate. It is also a moral.document. You can know what a country cherishes by looking at its budget document.”