Minister justifies N138billion loan

The federal government yesterday strived to explain away its determination to borrow $915m from the World Bank. The Minister of Finance, Olusegun Aganga, who was speaking at the presidential villa shortly after the signing of the 2010 budget said the loan will be spent wisely. "The most important thing for us is to make sure that in spending we get good value for the money spent, that it is spent in areas where we generate both social and economic returns; that is what is critical.".

He refuted speculations that the money will be used to finance the 2010 budget saying the administration was planning to raise a bond of about $5oo million from the international market for that. Mr Aganga who said the entire deal has been misrepresented, sought to clarify the matter: "This is absolutely wrong. We are not borrowing a billion [US dollars] to fund the budget. I think what they are referring to is something which we are working with the World Bank on. The World Bank, as you know, helps a number of developing countries and that [amount] is just a quantification of the work they are doing - which is broken down to quite a few segments. So, it is not one billion dollars borrowing up front; it doesn't work like that. It has nothing to do with the budget."

He also explained that government was looking at securing other sources of revenue, which could include sales of some assets and the possibility of raising a bond. However, he down-played fears about the potential for waste in the nation's spending plan.

He said, "I think the most important thing we should understand is that in a recession, there is nothing wrong about spending. In fact, if you look at any of the Western world they all have deficit[s].

Spending wisely

Mr. Aganga said all sectors of the government will be held accountable for its spending and promised that the new administration would be heavily focused on the proper execution of the budget. He announced that the Minister of Special Duties, Ernest Olubolade, had been mandated to handle the issue.

"It is ok to spend but it is important that you spend wisely and people are held accountable," he said. Mr. Aganga assured the nation that the creation of a Sovereign Wealth Fund to replace the old Excess Crude Account was a step in the right direction.

"As you know, the budget is based on benchmark of $67 per barrel - where oil is trading today. So obviously, over time, we will hopefully accumulate some excess reserve and the idea is how we build some fiscal policy around it or prudential guideline[s] around it to make sure that that is properly managed."

A reluctant support

At yesterday's sitting of the House of Representatives, a motion moved by the deputy leader, Baba Shehu Agaie, urging the lawmakers to approve the World Bank loan to fund the nation's "infrastructural deficit" was vehemently opposed by members of the minority parties. Although the session degenerated into rowdiness, the opposition could not stop the over 270 members of the Peoples Democratic Party, from approving Mr. Jonathan's request.

The approval followed a discussion that the leaderships of the Senate and the House had with the executive on Tuesday night.

The chairman of the House finance committee, John Eno, said members had to approve the request since the executive had complied with the relevant laws requiring it to forward such requests to the legislature for approval.

He recalled that the executive had in the past ignored this law and praised the acting president for not just forwarding a request for approval of the fresh loan, but also formally submitting the external borrowing plan of the government.

He also argued that since the money being requested for was already factored into the budget as a funding item, it was only right to approve the request.

The chairman of the committee on rules and business, Ita Enang, who also spoke in favour of the motion, said the acting president complied with Section 21 of the Debt Management Office Act, which he said allows the government to borrow upon the approval of the National Assembly.

Mr Enang, a PDP member from Akwa Ibom, reminded his colleagues that in the 2010 Budget passed by the National Assembly, there was a provision for borrowing to fund the document, adding that the legislature has already committed itself.

Those who opposed

But the deputy minority leader, Abdulrahman Kawu opposed Mr Jonathan's request, although he said he was one of the leaders of the legislature that met with Mr. Jonathan on Tuesday night on the plan to take a fresh loan. A member of the All Nigeria Peoples Party (ANPP) from Kano State, Mr Kawu said history will not forgive the lawmakers who approved the loan. He faulted the procedure for considering the request for the loan, regretting that members were only given the 235-page external borrowing plan just before the plenary commenced. He argued that the lawmakers would have no time to read it before voting on the request.

Also, the Minority leader, Mohammed Ali Ndume, who also objected to the request, said it would not only amount to mortgaging the future of Nigerians,

it may also return the country to another era of huge indebtedness from which it came out only few years ago when its debt was forgiven by the external creditors.

He recalled that at the meeting with Mr Jonathan, the acting president merely said that the World Bank was willing to give Nigeria $915 million, but did not clearly seek for approval.

Mr Ndume, who is also the ANPP leader in the House, said "There was no opportunity for me to say our mind. That does not mean we (minority parties) are in support. It is not fair. We have just been given this voluminous borrowing plan and you want us to read it now before we approve. It is not fair. Those people that want us to borrow must come here to explain," he said.

Despite the opposition, members voted overwhelmingly for the approval of the acting president's request when it was put to vote, forcing Messrs Ndume, Kawu and other members of the ANPP to leave the chamber.

Unnecessary loan

At a press conference, Mr. Ndume explained that the country does not need to obtain the fresh loan since, according to him, it makes about $800 million daily from oil.

"As at today they are telling us that we are producing 1.02 million barrels of crude a day and the market price is about $80. If you can make that money one day why should you need the loan? If you multiply that, you get more than $800 million," he said. "Why would you go and mortgage the future of our children?"

The minority leader, who admitted that the opposition had already lost the battle to stop the loan, lamented that members of the House approved it without knowing the implication of doing so. He added that they may have done so because certain things, which he did not disclose, were dangled before them by the government.

Mr. Ndume also revealed that Mr. Jonathan and Mr. Aganga also discussed the plan to increase Value Added Tax (VAT) from five percent to 10 percent and also bring two bills to the legislature.

Throwing more light on why he could not object to Mr. Jonathan's request for the loan during the Tuesday night meeting, Mr. Ndume explained "We (members of the leadership) went in a bus and when we got there we ate food first and the acting president said the finance minister will brief us. The minister said we had problems with some sections of the budget. He said they selected nine critical ministries (to review).

"But after that I was the one who complained that how can one man (finance minister) review what (budget) 469 members (of the National Assembly) did? After that the chairman of the Senate Committee on Appropriation (Iyiola Omisore) was also hard on them."

Also speaking at the press conference, the chairman of Public Accounts Committee, Usman Adamu, who is also a member of the ANPP, wondered if Nigeria could manage the loan since it could not manage its own resources efficiently.