March 21, 2019

$2.8bn Eurobond A Bad idea, Ezekwesili Tells FG

$2.8bn Eurobond A Bad idea, Ezekwesili Tells FG

The Federal Government (FG) has been advised to suspend its plan to borrow $2.8billion to fund the 2018 budget with former Vice-President (Africa) of World Bank, Oby Ezekwesili deeming it a bad idea.

Ezekwesili, who was a former Minister of Education, gave the advice while speaking to newsmen in Lagos in reaction to a statement made by the Minister of Finance, Zainab Ahmed who said the government would soon float the bond.

Also Read: Oby Ezekwesili: Former Minister Slams Buhari Over PIGB – Bakare Majeed

Zainab said this when addressing the audience during the annual International Monetary Fund (IMF) meeting in Bali, Indonesia.

She said, “The upcoming bonds that we are trying to raise will be within the 2018 budget framework and with approved targets.

“So, we are not going beyond what was approved in the budget. The budget has approved for us to borrow both locally and internationally and we have a bond issuance with the range of 2.8 billion dollars that we need to raise before the year closes out.

‘’The bond will be used to fund capital projects in the 2018 budgets”.

However, Ezekwesili disagreed saying borrowing is not the way forward as it is not sustainable because the country is not generating enough revenue to meet its needs.

“What, in my view, the plan to float the bond portends for the economy is that the Federal Government is digging in instead of digging out.

“Already, the debt service to revenue is so high. Today it is 69 per cent. 69 per cent of revenue is used to service our debts.

“That is not a sustainable situation. I see the government quote all the time `Debt to GDP ratio’, but that is like a blunt instrument in an environment where your GDP is not reflective of your productivity.

“We measure your productivity by the revenue the GDP generates in the form of revenue of government that comes as a result of the GDP.

“Your debt to GDP is three per cent and you think that gives you the legroom to borrow and borrow. No, that is not your instrument.

“Your instrument is your debt service tool, which is the revenue,” she said.

She implored the government to diversify revenue sources and enact deep structural reforms to reposition the economy.

Ezekwesili also urged the country to prioritise its needs and deploy limited resources only in those areas with massive impact on development.

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