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$5.8bn Loan: SERAP Advises Buhari to Issue Moratorium on Borrowing

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The Socio-Economic Rights and Accountability Project (SERAP) has urged President Muhammadu Buhari to immediately issue moratorium on borrowing by the federal government and the 36 states in order to address what it described as a systemic debt crisis, prevent retrogressive economic measures and the disproportionately negative impact of unsustainable debt on the poor Nigerians.

The request followed the recent approval by the National Assembly of President Buhari’s request for a $5.8 billion loan and grant of $10 million.

In the open letter dated December 18, 2021, and signed by SERAP’s Deputy Director, Kolawole Oluwadare, the organisation said a moratorium on borrowing would create a temporary debt standstill, and free up fiscal space for investment in Nigerians’ needs, as well as ensure sustainable economic and social recovery from the COVID-19 pandemic.

SERAP said long-term unsustainable debt could be a barrier to the government’s ability to mobilise resources for human rights, and may lead to taxes and user fees that impact negatively on vulnerable and marginalised Nigerians.

The letter, read in part: “SERAP is concerned about the lack of transparency and accountability in the spending of the loans so far obtained, and opacity around the terms and conditions, including repayment details of these loans.

“While the National Assembly has asked for these details in future loan requests, it ought to have seen and assessed the terms and conditions of these loans before approving them, in line with its oversight responsibility under the Nigerian Constitution of 1999 (as amended).

“The federal government and many of the 36 states would seem to be in debt distress or at high risk of debt distress.”

According to reports, the Senate and House of Representatives recently approved the loans of $5,803,364,553.50 and a grant component of $10m under the 2018-2020 External Borrowing (Rolling) Plan of the Federal Government.

Several of the 36 states are also facing a debt crisis, and vicious debt cycles, it noted.

According to the Debt Management Office, the foreign debt stock of the federal government, 36 state governments and the Federal Capital Territory presently stands at $37.9 billion.

“The loans from China alone amount to $3.59 billion. According to the UN Independent Expert on foreign debt and human rights, Nigeria faces debt service relative to tax revenues that exceed 20 per cent, with escalating social tensions linked to poverty and inequality.

“The growing level of borrowing by your government and the 36 states is clearly a human rights issue because when the entire country is burdened by unsustainable debts, there will be little money left to ensure access of poor and vulnerable Nigerians to basic public services.

“SERAP shall take all appropriate legal actions to compel your government and the 36 states to comply with our requests,” it wrote to the president.

 

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