Prof. Jonathan Aremu, renowned economist and professor of International Economic Relations at the Covenant University, Ogun state, in this interview with Ibrahim Apekhade Yusuf has urged the federal government exercise restraints over its plans to obtain $30billion loan. Excerpts:
DO you think the call for $30billion loan by the federal government is justified?
Well, normally when there is economic recession as we have now; there will be need to pump money into the economy whether through internal or external borrowing. But my only worry is that I don’t think the government has done all it needs to do before taking the loan. According to the International Monetary Fund (IMF), before you contemplate borrowing at all, you must first of all embark on a financial programme to determine the funding or financial gap in the system. You don’t just borrow money for the fun of it.
Are you saying the government hasn’t done the proper due diligence required?
That is the point I’m making. As stipulated by the World Bank/IMF, part of the conditionalities attached is that the IMF must carry out a financial programme for the country to determine which of the sectors require funding. You don’t just borrow money and then start dolling out money anyhow. I don’t think the government has any policy adjustment to back up its borrowing. If the borrowing is not productive then that is delicate for the economy. The danger about borrowing when you don’t take proper precaution is that the future generations will keep paying. Such kind of borrowing is not sustainable at all. Sustainable development is a development which doesn’t affect future consumption negatively and vice versa.
So in essence you believe the government should jettison this whole idea of borrowing?
As I said government needs to borrow but certain conditions must be met. That is why I think the National Assembly has called for a representation of the proposal. How can you have miscellaneous in a borrowing plan/ that is absurd. Everything should be spelt out in black and white. There is need for the federal government to carry out a proper financial programme for the country and determine the funding gaps and what are the expected multiplier effects that will generate higher productivity. I’m not aware of that. They are still talking about financing constituency projects and are still discovering where there are wastages in the system. This is not right at all. A policy adjustment is necessary. This government has not told us what policy adjustment it has taken to forestall the wastages and leakages in the system otherwise we will just be substituting external funding for domestic wastages. Let them tell us which areas we have financial gaps and then we’re going to discuss because it’s not a good thing to just borrow without taking any of these things into consideration. (The Nation)