By Ayodele Aminu

The Federal Government has pegged 2007 foreign borrowings, at both Federal and state levels, to a maximum of $1.5 billion (about N193.5 billion), in a bid to curtail frivolous foreign borrowings.

However, while approving the maximum figure, President Olusegun Obasanjo was said to have categorically stated that the loans, if they must be taken, are to be on concessionary basis and not exceed three per cent interest rate per annum.

According to a Presidency source, the President also approved a ceiling of $2 billion (about N258 billion) for foreign borrowings for 2008.
This, the source disclosed, "is a mark of government's seriousness to ensure that the country does not return to its former level of external debt burden."

Already, both the Ministry of Finance and the Debt Management Office (DMO) have been intimated of these developments to enable immediate implementation.

"The decision to place a maximum limit on foreign loans is to prevent the country from reverting to its previous predicament in terms of unsustainable external debt, which arose from the accumulation of poorly serviced debts.

"Foreign loans are to be tied to fund specific projects while external crude savings will be reserved to finance priority projects," the source said.
The source also noted that the President had pegged 2006 foreign borrowings at $3 billion and that government did not go beyond the limit for the year despite several foreign loans offered by countries like Japan, China and Korea.

Majority of the loans accessed by government last year were used to finance the Mambilla Hydro project, railway modernisation project and rural telephony.

To demonstrate that the incumbent government is not ready to encourage any frivolous spending from any of the tiers of government, an Inter-Ministerial Committee of all the ministries and federal agencies has been established and is to be involved in efforts to raise foreign loans to fund priority infrastructural projects.

Chaired by the Finance Minster, Mrs. Nenadi Usman, who is also the Head of the Economic Management Team, the Inter-Ministerial Committee, has been saddled with the responsibility of scrutinising the proposals of federal ministries and their agencies for foreign borrowings in 2007.

It would be recalled that the Senior Resident Repres-entative of International Monetary Fund (IMF) in Nigeria, Dr. Idrissa Thiam, had advised the Nigeria to henceforth limit its borrowings to only concessionary loans.

"Nigeria's debt has become sustainable following the exit of the Paris Club debt. What the country needs to do now as far as debt management is concerned is to be preventive and to follow the rules of borrowing. Also, Nigeria needs to limit the borrowing to only concessionary loans," Thiam said.

Nigeria's external debt, according to the DMO, currently stands at $3.544 billion (about N453.632 billion) as last December, as against the figure of $35.916 billion as at December 2004.

Wow, Nigeria has reduced their external debt by 90% in the last two years and just lowered their credit limit by 100% heading into this year. Who is borrowing from the moneychangers anymore? This third world cesspool is not going to accept any loans over 3% interest, but yet I'm supposed to believe rates head higher? The Rothschilds made their fortune lending to Kings and Queens and it would appear the Kings and Queens aren't borrowing any longer to increase the money supply, yet I'm supposed to believe Joe and Jane Six Pack are going to increase the money supply by borrowing to buy a house that cost 20% less than it did a year ago? Interesting times.