N1.84trn deficit spending: Buhari plans to borrow N5b daily – PDP

The People’s Democratic Party (PDP) has again said that the N6.08 trillion 2016 federal budget presented by President Muhammadu Buhari is a huge fraud, warning that with the proposed N1.84 trillion borrowing, Nigeria is going the way of Greece.
Speaking with journalists on Tuesday in Abuja, the National Publicity Secretary of the PDP, Olisa Metuh, explained that a breakdown of the N1.84 trillion shows that Nigeria would be borrowing N5 billion a day for the next 365 days, starting from January I, 2016, without corre¬sponding provision for econom¬ic production and a clear repay¬ment plan, a scenario that spells doom for the future of the na¬tion.
Metuh said: “Some peo¬ple may be wondering why we raised an alarm about the budg¬et. The reason is simple. When we analysed the budget, we dis-covered it is a misshapen attempt at a Keynesian economics of ap¬plying deficit spending to stim¬ulate growth even when studies have proven that GDP growth rates decrease by over 50 per cent when debt goes from low or moderate to high. But then, we know the borrowing here is to pay huge campaign debts and fund a political war chest.
“By every standard, this budget is a booby trap against the nation. When you break down the proposed N1.84 tril¬lion borrowing, you discov¬er that it amounts to borrow¬ing 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 President should ex¬plain to Nigerians how they in¬tend to pay back the loan. Is it by continuous borrowing to service the interests, and does he intend to accumulate colossal debt for future generations of Nigerians?
“The truth is that this admin¬istration cannot justify this pro¬posal. There is no known econ¬omy in the world where you can justify borrowing N1.84 trillion without specific projects and precise repayment outline. This is worse still in an oil-driven, mono-economy at a time crude oil is selling at $30 per barrel and is speculated to go down to about $20 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 bor¬rowing will be negative. They are driving us to be like Greece, and to plunge us into unnecessary debt. When the PDP took office in 1999, we achieved the cancel¬lation of inherited debts. This ad-ministration, in seeking to accu¬mulate debts, should know that there is no possibility that any country in the world will give us debt cancellation anymore.”
Metuh added, “More im¬portantly, we are really worried about negative economic poli¬cies of the present administra¬tion and the copying of strategies that failed in other economies. Recall that we had earlier alert¬ed on the negative consequenc¬es of the retrogressive foreign exchange controls wherein this government is making it impos¬sible for honest Nigerians to en-gage in free trade and regulate their personal activities.
“There seems to be the erro¬neous belief that the controls will create foreign exchange stability or strengthen the Naira by lim¬iting foreign currency outflows. This policy had badly affect¬ed 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 poli¬cy that failed in other countries?
“In practice, the kind of crude controls the Federal Gov¬ernment is implementing have been proven ineffective in pre¬venting capital flight. By limiting the local availability of foreign exchange, the controls have in¬stead increased the demand for foreign exchange, putting greater pressure on the naira and achiev¬ing the exact opposite of what the government in its naivety believed would happen.
“The negative impacts of the ill-conceived controls include the hindering of international trade and discouraging of for¬eign investment.
We have seen first-hand the crippling of the private sector in the last six months, upon the implementation of these meas¬ures. Traders, importers and all manner of businesses are being destroyed as a result of the con¬trived unavailability of foreign exchange.”
The PDP spokesman chal¬lenged the Federal Government to a public and open debate on the budget, devoid of the sen¬timents of the APC-controlled National Assembly.