PDP: Buhari planning to borrow N5bn per day

The Peoples Democratic Party (PDP) says President Muhammadu Buhari is planning to borrow a minimum of N5 billion per day to finance the N6.08 trillion 2016 budget.

Challenging the government to a public debate in Abuja on Tuesday, Olisa Metuh, the national publicity secretary of the PDP, condemned the Central Bank of Nigeria (CBN) foreign exchange policy, saying it is “ill-conceived”.

“Some people may be wondering why we raised an alarm about the budget. The reason is simple. When we analyzed the budget, we discovered it is a misshapen attempt at a Keynesian economics of applying deficit spending to stimulate growth even when studies have proven that GDP growth rates decrease by over 50% when debt goes from low or moderate to high,” Metuh said.

“But then we know the borrowing here is to pay huge campaign debt and fund a political war chest. When you break down the proposed N1.84 trillion borrowing, you discover that it amounts to borrowing N5 billion every day for the 365 days in 2016.

“The questions are: for what specific projects are they borrowing N5 billion per day and how do they intend to pay back? The truth is that this administration cannot justify this proposal. There is no known economy in the world where you can justify borrowing N1.84 trillion without specific projects and precise repayment outline.”

Metuh accused the government of driving Nigeria to be like Greece by plunging it into unnecessary debt.

“This is worse still in an oil-driven, mono-economy at a time crude oil is selling at $30 dollars per barrel and is speculated to go down to about $20 dollars or even lower in the next one year.

“The idea can only come when you diversify the economy and boost production capacity in manufacturing and other critical sectors, a direction, which the budget clearly failed to provide. From all indicators, the borrowing will be negative.

“More importantly, we are really worried about negative economic policies of the present administration and the copying of strategies that failed in other economies.

“Recall that we had earlier alerted on the negative consequences of the retrogressive foreign exchange controls wherein this government is making it impossible for honest Nigerians to engage in free trade and regulate their personal activities.”

On the forex policy, the PDP said: “There seems to be the erroneous belief that the controls will create foreign exchange stability or strengthen the Naira by limiting foreign currency outflows”.

“This policy had badly affected other countries in the recent past, including Argentina, whose new government had to reverse the policy to save their economy. Why then are we copying a policy that failed in other countries?

“In practice, the kind of crude controls the Federal Government is implementing have been proven ineffective in preventing capital flight. By limiting the local availability of foreign exchange, the controls have instead increased the demand for foreign exchange, putting greater pressure on the naira and achieving the exact opposite of what the government in its naivety believed would happen.”