TWO months after formally presenting the 2012 Budget Proposal, President Goodluck Jonathan fell for the foreign credit facilities amounting to US$7.906 billion offered by five foreign financial bodies. As a result, the MDAs secretly inserted projects estimated at over N1 trillion into the 2012 budget proposals already before the legislature thereby pushing the fiscal estimate to about N5.7 trillion from the initial N4.7 trillion. Following the discovery of the hushed insertions, Jonathan approached the National Assembly to approve external borrowings of about N1.2 trillion made up of the offered foreign credit facilities. It is proposed to draw down the loan over three years (2012-2014) in order to finance pipeline projects which, as clearly stated, are still at various stages of finalisation.The request for the external loan raises important issues. First, to the extent that the pipeline projects are yet to be finalised, the total funding requirements are indeterminate. It is not good enough for Mr. President to rush to the National Assembly to seek external funds for projects whose costs, upon finalisation, could balloon. Second, the executive arm of government did not hide the fact that the pipeline projects were an afterthought: they were not part of the government's medium term (2012-14) external borrowing plan that formed an integral part of the medium term expenditure framework for the period. Haggling over the expenditure framework delayed the presentation of the 2012 Budget Proposal till mid-December, 2011. The unsettling conclusion is that Jonathan is relying on foreign loan sharks to fill in his so-called Transformation Agenda, which is another name for Vision 20-2020 which itself is the brain child of Goldman Sachs of U.S.A. It is unacceptable to yoke the economy to deceptive foreign hand-me-down designs.Third, expectedly, the administration betrayed that it was playing the puppet when, despite the planned annual loan draw down of N409.2 billion, new projects accounting for the entire loan of N1.2 trillion were secretly, inserted in the 2012 Budget Proposal alone. Puppets are ignoble and are looked down upon by their puppeteers. Fourth, the planned pipelines are unspecified and the projects may well be duplication. We already have the West African Gas Pipeline from which distributary pipelines could be laid; Oando company gas supply reticulations in Lagos; and Shell company gas supply reticulations in Agbara and elsewhere in Ogun State. There exist the gas-to-power price regime and World Bank guarantee to facilitate gas gathering by gas producers for supply to independent power plants and other end-users. The under-utilised refined petroleum products pipeline network does not require wholesale replacement while cement plants in Cross River and Kogi states laid their own pipelines. We therefore doubt if supplementary Federal Government pipelines, given the corruption-prone and quota-based staffing government practices, will generate enough returns to defray any external loans incurred for their construction.Fifth, the Jonathan administration cannot feign institutional amnesia of the first jumbo loan of $1 billion contracted in 1978, the subsequent loan deals and scams and the resulting external debt peonage from which the country exited in 2006. Notwithstanding the touted concessionary terms and the cajolery about Nigeria's debts falling below the so-called internationally acceptable national debt level of 40 per cent of GDP, the rushed bigger jumbo loan offer of $7.906 billion will leave the economy worse off. It has been established that 40 per cent of such loans are diverted by way of kickback to colluding loan-giving and loan-taking officials. That factor and possible promises of international appointments to conniving government officials may be the real motivations driving the current push for external loan. In that event, the country would be shortchanged. It is condemnable.By contrast, subject to sound monetary practices (and these have been lacking for four decades), Nigeria boasts a far superior benefit-maximising and all-round economy-transforming alternative to contracting any external loan. There are available dollar funds several times the cumulative loan offer, namely, the $1 billion earmarked for the Sovereign Wealth Fund, the undisbursed funds in the excess crude account and the holdings of foreign reserves over and above the internationally recommended three months' import cover. Besides, a little arithmetic reveals that in 2012 alone, given the high daily oil output, the crude oil price topping $100 per barrel and the benchmark oil price of $70 or even $75 per barrel, government's 60 per cent stake in joint-venture oil operations would fetch over $16 billion (over N2.5 trillion). The Federal Government share of such accruals outstrips the external loan sum being sought for the pipeline projects.At this juncture, we are confronted by the unsound monetary practices that have shipwrecked the economy since the late 1970s. As has become customary, the CBN monetary policy committee's communiqu released on January 31, 2012 warns that to spend or invest the country's oil proceeds above the benchmark oil price of $70 per barrel is to invite economic dislocation, monetary tightening and attendant economic contraction. By the same token, to expend or invest additional resources such as the dollar funds at the country's disposal listed earlier and any external dollar borrowings (for government spending) would harm the economy (only for the dollar accumulations to be frittered away by the apex bank). The CBN should stop hobbling the country with such recommendations which are patently unsound.In light of all the issues considered above, the National Assembly should treat summarily and ditch Jonathan's request for $7.906 billion external loan. Government should instead assure loan sharks and pestering multilateral loan hawkers that ours is an open economy in which they are free to invest their funds directly or through affiliates and make money to their hearts' content.With regard to the administration's stated intention to use the proposed external loan 'to put the economy back on track through growth and employment activities,' the best and cost-free way forward is to correctly convert Federation Account oil proceeds to realised naira revenue through deposit money banks for government expenditure as a prelude to implementing sound monetary measures. That step would not only stop further increase in the national domestic debt by over 95 per cent but also unfurl conducive economic conditions, the much sought-after enabling environment that fosters ample and cheap bank credit. The private sector could then undertake all types of investment including breaking any infrastructural bottlenecks that crop up; the real sector would flourish and spread prosperity as the economy tends towards full employment. While genuine foreign direct investment would be a beneficial supplement, it should be emphasised that Nigeria generates all foreign exchange needed to complement domestically procured bank financing for extensive economic activities and so government has no business contracting external loans to unnecessarily burden the people.
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