Economists have continued to interrogate the $6 billion loan request of President Bola Ahmed Tinubu, which got the National Assembly’s express approval within the week. An Abuja-based economist, Dr. Ilya Aliyu, said seeking a loan is not a bad idea if applied reasonably for economic purposes.
He said borrowing could be positive or negative depending on its application by the government in power. “There are positive and negative impacts of borrowing. What worries most people regarding the $6 billion request for borrowing was prompt approval by the National Assembly. The request wasn’t subjected to debate.
“It was express approved. When we borrow, it brings pressure and a spike in inflation, especially if it is not well managed. Inflationary pressure will lead to a high cost of living for Nigerians, and it will affect our exchange rate. It will have a telling effect on the debt service. Those are some of the negatives of unrestrained borrowings.
“Borrowing is not a bad idea, as I have said. It has a lot of good impact on the economy if utilised well, if it is deployed to capital projects funding. You recall that last year we could only achieve 30 percent of the capital projects, so I think with this; it will help in funding more projects captured in the 2025 and 2026 capital projects.
“The borrowing is to be deployed in funding part of the Tin Can Apapa and port project. I think that’s part of what they want to use it for. So it has positivity, and it’s going to be a good injection into the Nigerian economy. “However, most of us are concerned about the election and spending.
Overall, debt is not bad when it is well managed, but when it is not well managed and it veers to something else, it is a problem for the economy,” Dr. Ilya said. On his part, Prof. Ken Ife said the government has not given detailed information on the usage of the fresh borrowing, adding, “Please give me information on what it is needed for, as I can’t see one,” he quipped.
The two chambers of the National Assembly, the Senate and House of Representatives, expressly approved a $6 billion external borrowing request submitted by President Bola Tinubu, clearing the way for the federal government to access financing from lenders in the United Arab Emirates and the United Kingdom.
The request, contained in two separate letters addressed to the Speaker, Abbas Tajudeen, was read during plenary on Tuesday. In the first communication, Mr. Tinubu sought legislative approval to establish a structured Total Return Swap (TRS), external financing programmes of up to $5 billion with First Abu Dhabi Bank.
