N6.08trillion budget: 'Nigeria going the way of Greece' - PDP warns

Read the press statement from the PDP
below...

The Peoples Democratic Party (PDP) has
thrown more light into why the N6.08
trillion 2016 federal budget presented by
President Muhammadu Buhari is a huge
fraud, warning that with the proposed
N1.84 trillion borrowing, the nation is
going the way of Greece.
Speaking with journalists yesterday in Abuja,
the National Publicity Secretary of the PDP,
Olisa Metuh, explained that a breakdown of
the N1.84 trillion shows that Nigeria would be
borrowing N5 billion a day for the next 365
days, starting from January I, 2016, without
corresponding provision for economic
production and a clear repayment plan, a
scenario that spells doom for the future of the
nation.

According to Metuh, “Some people may be
wondering why we raised an alarm about the
budget. The reason is simple. When we
analyzed the budget, we discovered it is a
misshapen attempt at a Keynesian economics
of applying deficit spending to stimulate
growth even when studies have proven that
GDP growth rates decrease by over 50% when
debt goes from low or moderate to high. But
then we know the borrowing here is to pay
huge campaign debt and fund a political war
chest.

"By every standard, this budget is a booby
trap against the nation. When you break down
the proposed N1.84 trillion borrowing, you
discover that it amounts to borrowing N5
billion everyday for the 365 days in 2016. The
questions are: for what specific projects are
they borrowing N5 billion per day and how do
they intend to pay back?
“The President should explain to Nigerians
how they intend to pay back the loan. Is it by
continuous borrowing to service the interests,
and does he intend to accumulate colossal
debt for future generations of Nigerians?

"The truth is that this administration cannot
justify this proposal. There is no known
economy in the world where you can justify
borrowing N1.84 trillion without specific
projects and precise repayment outline. This
is worse still in an oil-driven, mono-economy
at a time crude oil is selling at $30 dollars
per barrel and is speculated to go down to
about $20 dollars or even lower in the next
one year. The idea can only come when you
diversify the economy and boost production
capacity in manufacturing and other critical
sectors, a direction, which the budget clearly
failed to provide.

"From all indicators, the borrowing will be
negative. They are driving us to be like
Greece, and to plunge us into unnecessary
debt. When the PDP took office in 1999, we
achieved the cancellation of inherited debts.
This administration, in seeking to accumulate
debts, should know that there is no possibility
that any country in the world will give us debt
cancellation anymore.”
Metuh added, "More importantly, we are really
worried about negative economic policies of
the present administration and the copying of
strategies that failed in other economies.
Recall that we had earlier alerted on the
negative consequences of
the retrogressive foreign exchange controls
wherein this government is making it
impossible for honest Nigerians to engage in
free trade and regulate their personal
activities.

“There seems to be the erroneous belief that
the controls will create foreign exchange
stability or strengthen the Naira by limiting
foreign currency outflows. This policy had
badly affected other countries in the recent
past; including Argentina, whose new
government had to reverse the policy to save
their economy. Why then are we copying a
policy that failed in other countries?

“In practice, the kind of crude controls the
Federal Government is implementing have
been proven ineffective in preventing capital
flight. By limiting the local availability of
foreign exchange, the controls have instead
increased the demand for foreign exchange,
putting greater pressure on the naira and
achieving the exact opposite of what the
government in its naivety believed would
happen.

“The negative impacts of the ill-conceived
controls include the hindering of international
trade and discouraging of foreign investment.
We have seen first-hand the crippling of the
private sector in the last six months, upon the
implementation of these measures were out.
Traders, importers and all manner of
businesses are being destroyed as a result of
the contrived unavailability of foreign
exchange. ”
The PDP spokesman challenged the Federal
Government to a public and open debate on
the budget devoid of the sentiments of the
APC-controlled National Assembly and who
are minded against any cuts in their own
allocation.