President Goodluck Jonathan has directed the National Economic Management Team to draw up a new guideline for external borrowing, the Minister of State for Information and Communications, Labaran Maku, said yesterday while briefing pressmen after the weekly Federal Executive Council.
According to Maku, the decision was reached to ensure that Nigeria borrows for projects that will have a direct and immediate impact on the country’s economy.
The minister also said the president, “frowns at a situation where, after exiting the London and Paris club of creditors, Nigeria should again return to the situation of the past.
Therefore, external borrowing must be tied to productive activities that generate revenue, improve economic development, increase Gross Domestic Product (GDP) and increase employment in the country”.
He said the president also directed a thorough analysis of every loan that Nigeria intends to take subsequently, whether by the federal or individual state governments, to ensure that the loans must have impact on the economy.
From “today onwards, the question of new debts or new external loans will be tied to the new guidelines to be developed by the National Economic Management Team” Mr Maku said.
“The President was very emphatic about this development because the Nigerian economy is in need of productive activities.
A situation where loans might be taken that are not directed at development or increasing infrastructure or increasing the general volume of goods and services in the economy will not be in the best interest of Nigeria”.
The minister also said the executive gave approval to the Ministry of Finance to pay up Nigeria’s new share capita allocated by the African Development Bank (ADB).
“Council equally approved the payment of N6.5 billion (USD43.341 million) per annum for 8 years, starting from 2010 with the N1.7billion provided in the 2010 budget in addition to the issuance of promissory note for the balance of N4.8billion,” he said.
“The ADB had offered Nigeria 386,021 unit of shares from its Sixth General Capital Increase out of which 23,215 constitutes the paid up portion.
The value of the paid up portion of 23,215 is USD346.730million which is about N52.01billion.”
In 2006, Nigeria paid off its multi- billion dollar Paris Club debt. The move, which was said to have cleared the way for greater government spending on infrastructure, healthcare and education, is now gradually being threatened by a new debt profile.