What is going on with this clueless Government ? Brent crude is at a 2 year record high of $108.00 . With our budget benchmark for oil how much more are we making in profit per day with circa 2.6 million BPD (barrels per day) production rate ? Yet they rush , needlessly, to add $1.34 billion to our debt profile? Na wa oo . Perhaps the economists amongst us can shed more light on this borrowing that appears profligate , irresponsible and fiscally nonsensical.

Yes our borrowing forecast had been set already but I would think it is entirely senseless , for a pro-active and fiscally intelligent Government , to rigidly stick with pre-arranged borrowing plans if dynamic circumstances indicates we are in a period to save rather than borrow. It will be interesting to see if the GEJ Government will actually supplement the ECA account since the much touted SWF (sovereign wealth fund) does not even have ratified laws to enable it operate as a destination for excess income accrued in periods like these , of spiralling oil prices, with the pro-democracy crisis in the Arab world.

http://dailytrust.dailytrust.com/index.php?option=com_content&view=article&id=12740:senate-okays-more-foreign-loans&catid=2:lead-stories&Itemid=8

Senate okays more foreign loans

Thursday, 24 February 2011 00:00 Abdul-Rahman Abubakar   

The Federal Government and 14 state governments yesterday got Senate approval to take more foreign loans totalling $1.34 billion as part of the $3.702 billion outstanding 2010 external borrowing plan.

Out of the approved amount, the Federal Government is to get $152 million for the Power Holding Company of Nigeria (PHCN) while the 14 states are to share in $1.19 billion loans to be sourced from various financial institutions for different uses.


The Senate approval came through the adoption of a report of the Joint Committee on Finance and National Planning, presented by Senator Ahmed Makarfi.

A breakdown of the approved loans shows that Oyo State is to get $68million; Niger, $60 million; Taraba, $15 million; Imo, $60 million; Kebbi, $50 million; Cross River, $50 million; Edo, $50 million; Enugu, $100 million; Lagos, $333.8 million; Abia, $200 million; Adamawa, $50 million; Ondo, $50 million; Plateau, $50 million; and Osun, $60 million.

Oyo State’s share is expected to be used for the provision of urban water and sanitation project, while Niger State’s loan to be sourced from the French Development Agency (FDA) is for provision of rural access mobility project.

Taraba State’s loan from the Africa Development Bank (ADB) is for urban water supply project.

Also, FDA will be supplying the Imo State loan meant for rural access mobility project; Kebbi State is taking its loan from the International Development Association (IDA) for infrastructural development projects; while Cross River State plans to use $20 million for markets and another $30 million for power projects.

Presenting the committee’s report, Makarfi said, “The projects to be funded with the proceeds are desirable and will improve the state of infrastructure of benefiting states if properly applied.

“The states that have external debt exposure are within limit and have not contravened the provisions of the Fiscal Responsibility Act 2007, which stipulates that the total of loans outstanding at any particular time including the proposed loan(s) shall not exceed 50 per cent of actual revenue of the body concerned for the preceding 12 months.”

But he said the committee is yet to approve part of the external borrowing plan because of insufficient information provided by the benefitting states, while Lagos State withdrew from a proposed $200 million loan from IDA.

Any borrowing is completely irresponsible giving that
1. Track record of loans to development has been criminal
2. The current government leaves power in a few months
3. The current price of Crude oil which is actually trading at $116 in London today

But we all know why they borrow

Katsumoto:

Any borrowing is completely irresponsible giving that
1. Track record of loans to development has been criminal
2. The current government leaves power in a few months
3. The current price of Crude oil which is actually trading at $116 in London today

But we all know why they borrow

Indeed my brother. You will not see Jonathan's fans on this thread to defend the senseless borrowing policy of his Government that has receieved resounding condemnation home and abroad . Everything the man does has fraud and 419 cheaply written all over it . they argued that the ECA should not hold future oil windfall and rainy day savings . They proposed the SWF as a replacement for the ECA and promptly withdrew $1 billion , months ago , for a fund that has not even received the legal backing required for take-off . As if that was not irresponsible and presumptious enough , we now have a period of windwall earning the SWF should ostensibly be used for . Yet we have no SWF and no one can tell us where the $1 billion dollars withdrawn for its commencement is or why the money was withdrawn at all when , in reality , there was a chance the SWF may not even gain the required legal backing to enable it operate !!!!

Now oil is at $116.00 per barrel with the possibility that the conditions precipitating this rise  may yet tarry for a while and we are talking about borrowing money when the oil benchmark for the last budget was set at $62.00  This is incredibly profligate , crazy and unsustainable. Evene GEJ's own PAC (Presidential advisory committee) has condemned this Government for its financially irresponsible actions and policies. GEJ is just bad news . Pure and simple.

I really see us seeking debt relieve if GEJ continues in office. With the trouble in Libya, the excess crude account will definately gain a lot. I wonder what the money is been used for because there's been no infrastructural development of any kind in my area since GEJ took over.

Hamid O:

I really see us seeking debt relieve if GEJ continues in office. With the trouble in Libya, the excess crude account will definately gain a lot. I wonder what the money is been used for because there's been no infrastructural development of any kind in my area since GEJ took over.

And there wont be any in future . All you will see is many new billionaires and a new oligarchic class being created accross Nigeria who will coincidentally all be supporters of GEJ who 'stood behind him' staunchly.

I've said it before and will say it again: GEJ is NOT the man!!!!!!

I read somewhere that the ECA which had $20bn in its coffers when Jonathan took over is now down to a measly $3m.