Tuesday, 29 December 2015

FINALLY! PDP Explains Why It Raised Alarm Over Buhari’s Budget

The People’s Democratic Party (PDP) on Tuesday, December 29, listed reasons why the party raised massive alarm over the N6.08 trillion budget presented by President, Muhammadu Buhari before the National Assembly.

Speaking to journalists in Abuja, the national publicity secretary of the PDP, Oliseh Metuh said the budget presented by the president is a huge fraud.

Metuh said that the N1.84 trillion as proposed for borrowing on the 2016 budget amounts to Nigeria’s doom in the near future.

He added that a breakdown of the N1.84 trillion reveals that Nigeria would be borrowing N5 billion a day for the next 365 days, starting from January 1, 2016.

READ ALSO: President Buhari Presents 2016 National Budget

This he said does not correspond with provision for economic production or a repayment plan.

Metuh said: “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.”

The PDP spokesperson said, the 2016 budget is a trap against Nigeria as the budget failed to highlight specific projects for which the nation intends to borrow for.

“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?” he asked.

He added that the present administration under the leadership of President Buhari can barely justify the recent budget 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,” he said.

Metuh said as it is, borrowing is a negative plan for the country.

He further said his party is disturbed about negative economic policies by the Buhari-led administration, stating that the present administration have resorted to emulating economic policies that have failed in the past.

“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.

“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.”

He said: “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?”

Metuh added that the crude controls implemented by the Federal Government have been proven to be ineffective in preventing capital flight.

Adding that by limiting the local availability of foreign exchange, the controls have obviously increased the demand for foreign exchange thereby 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,” he stated.

Buhari presented a N6.08 trillion budget last Tuesday for the fiscal year 2016.

The House of Representatives said that budget would require “thorough overhauling” by the National Assembly to bring it in tune with current economic realities.