A member of the Senate, Senator Jimoh Ibrahim (Ondo South), has stressed the need for President Bola Tinubu to borrow from the global market to fill the deficit created by the former President Muhammadu Buhari’s administration.
AFRESH247 recalled that residents have, in recent times, been deterred by increasing criticisms of the Federal government’s continuous borrowing to fund budgets.
Senator Ibrahim, an Ambassador designate while fielding questions from journalists at the end of the Senate Committee on Finance interactive session with the Federal government’s Economic Team said Tinubu’s administration,” the federal government will be wasting their time if they don’t borrow now. Because the lending market will dry up very soon. The global lending market will disappear.
“And once that disappears, even when you work low, you can never get. So, the strategy is to have enough money now to face the development and start facing the payment of those loans. Dubai, a population of 12 million people, are owing $186 billion.
“Nigeria’s total debt is about $103 billion. So, meaning that Dubai owes much more than Nigeria. There are 12 million people.
“Nigeria has 250 million people who are even crying about their debts. Now, Dubai has finished borrowing. They don’t borrow anymore.”
Continuing he said “But they are now repaying. And they pay about $20 billion back every year. And they have enough revenue to do that.
“If you don’t borrow, how do you develop? I don’t understand. Borrowing is a necessary gear in development. It’s like you put your car in gear four, you know, and then there’s a gear five.
” It gives you more comfort. But if you put your car in gear two, and you want to race at 120 kilometers, that engine will just not come on. So, the key point is that resources are available.
“It’s not enough to save the economy with the trillion you owe to your GDP. So, you need that extra support. And if you don’t borrow now, the lending market will disappear.
“The GDP to debt ratio in America is 127%, meaning that America has overborrowed by 27%. In London, it’s 95%, in Britain. Meaning that in Britain, what, $195 have been used to borrow money.
“So, which country are you really copying? Ghana is the fourth largest debtor to the IMF World Bank. So, if Nigeria’s GDP-to-debt ratio is 40%, you still have 60% room to borrow. So, if you are now saying, don’t borrow, don’t borrow, and the lending market disappears, you can’t borrow from yourself.
“You can’t lend to yourself. What about the repayment strategy? The repayment strategy will take a long time. It’s not something that you borrow and return in one year.
“So, you spread your balance sheets. You can even borrow more to clear the $100 billion, right? And then you are now zero debt. And then you can now repay what you borrowed to borrow to clear $100 billion over a period of 10 to 20 years.”
The lawmaker further explained that ” the lender will agree with you on that. But where you don’t borrow at all, and the lending market disappears, then you cannot lend money to yourself. That means you are going to use ways and means by cutting money to fund the economy.
“That means you will have inflation. You will have unemployment. The value of the dollar will come down.
“And, of course, the world will come down. But last year, sir, they said this issue of borrowing, sir, last year, the National Assembly approved borrowing for the federal government. And at the same time, they were still complaining of zero implementation of the budget.
“Borrowing approved by the federal government, by the National Assembly last year, is cumulative borrowing that got to you. So, you have to get a resolution from the National Assembly to turn over, to roll over those debts when they mature so that your book can be claimed. So, it’s a management of debts at that level.”
On Buhari’s Ways and Means policy, Senator Ibrahim noted that former Buhari did a $33million ways and Means by printing $33million higher.
“When we are talking about the first borrowing of injection of capital, Buhari did a $33 million ways and means, meaning that he printed $33 million higher. You cannot clear the effect of that in two years. You printed $33 million domestically, and you borrowed $68 billion outside.
“And you want Nubu to clear it in two years. He will be a magician. With $33 million ways and means, it’s just too much.”
He added, “I don’t think it’s the best way to handle an economy. We are actually in financial danger when all of this happened.”
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