Africa

Debt relief: House raises questions over $12.4B supplementary budget

House members that spoke under the condition of anonymity have accused President Obasanjo of breaching the constitution by going ahead to pay the debt even before the approval of the National Assembly.

Last Tuesday President Olusegun Obasanjo sent in a supplementary budget of $12,4 billion to the National Assembly for approval to enable the Federal government settle once and for all the remaining balance of the debt owed the Paris Club. However, some members of the House are grumbling that the cheque for the money has already been handed over to the Paris Club while the bill was sent as a mere formality.

The campaign for Nigeria’s debt cancellation started like a joke. Not a few people were very skeptical that anything positive could be achieved from such a campaign. However, President Olusegun Obasanjo and the Minister of Finance, Dr. Ngozi Okonjo Iweala were undaunted. They were soon joined by the House of Representatives, which passed a resolution last year urging the Federal government to stop servicing the loan with huge sums of money annually.

But like a ray of light in a dark tunnel, the Paris Club of creditors last June signified their willingness to grant Nigeria a debt relief of 60 percent, which translates to about 18 US dollars. The willingness of the Paris club was tied to Nigeria’s readiness to fulfill certain conditions, chief of which was her readiness to pay the remaining amount on or before the end of this year.

The remaining amount was about 12.4 US dollars. As soon as Obasanjo was sufficiently satisfied that the Paris Club of creditor nations were not selling him a dummy, he addressed the joint session of the National Assembly on the 26th of July on the breakthrough made over Nigeria’s debt burden. In spite of the briefing, he still could not convince some skeptics that the debt relief was real.

Leading the group of hardliners who were not convinced by the President was Hon. Bashir Idris Nadabo who urged his colleagues not to hastily join in the celebration of debt relief. Similarly, he cautioned the House not to appropriate any money towards the servicing or settlement of the alleged balance of over $12 billion until a conclusive and binding agreement is reached between Nigeria and the Paris Club on the debt relief package.

He hinged his position on the press release that the Paris Club has merely indicated its readiness to enter into negotiations with Nigeria with a view to reaching an agreement on the comprehensive debt treatment in appreciation of the reform programmes of the federal government. Nadabo, who had earlier raised impeachable offences against President Obasanjo in a statement titled “debt relief for Nigeria by the Paris Club: Before we join the celebration and matters arising from the implementation of the 2005 budget” posed the following questions to the executive; “What are the actual or official terms of the relieves being offered to Nigeria by the Paris Club? Has the Paris Club actually granted Nigeria debt relief or is it that the club has merely indicated an intention to enter into negotiations with Nigeria which may lead to an agreement on debt relief?”

While acknowledging that the press release from the Paris Club, “no doubt represents a very positive development in our quest for debt forgiveness” he advised that “it is important for us to treat it for what it is, a mere declaration of intention to enter into negotiation with Nigeria on the issue.”

In his reaction, Leader of the Alliance for Democracy (AD), in the House, Hon. Wunmi Bewaji described the President’s briefing as “an exercise for self glorificationâ-oe” He argued that “18 other countries were given 100 percent debt forgiveness, 14 of them are from Africa and none of the presidents of these 14 countries did the global tour like President Obasanjo did,” he said adding: “I am very sure if we sit down to calculate the cost of the tours President Obasanjo did it will amount to a sizeable proportion of the foreign debt we are trying to work upon.”

He regretted that the President did not make any specific commitment as to how the money would be applied arguing, “in the past six years no less than N7 trillion had passed through the National Assembly out of which N7 billion was expended for roads, not even one single kilometer of road has been commissioned as at today, NEPA is deteriorating yet over N100 billion has been sunk into it. Therefore if you are saying you will apply the money for roads, health and so on you are not saying anything.”

Hon. Bashir Adamu said the President’s address “left me more confused because I was hearing for the first time that we were owing 38 billion US dollars and that we will repay 12 billion US dollars, this is confusing particularly that 12 billion is to be paid in a very short time.”

He noted that Nigeria is not the first African country to get debt relief “but those countries that got 100 percent debt relief were going about the whole thing calmly not even that, the Presidents of those countries were not into any form of globe-trotting. So I don’t understand the frenzy about the whole thing.”

President Obasanjo who remained undaunted went ahead to wrap-up the deal with the Paris Club by accepting to pay up the remaining balance. He therefore, sent a supplementary budget of 12.4 billion US dollars for approval to the National Assembly last Tuesday for the payment of the outstanding debt owed the creditors.

In “a bill for an Act to authorize the issue from the Federation Account, the total sum of 12.4 billion only for the payment of outstanding debt owed to the Paris Club of creditors” and covered by a letter sent to the National Assembly, Obasanjo requested for the approval to enable the federal government fulfill its agreement with the Paris Club.

The two page document states: “Be it enacted by the National Assembly of the Federal Republic of Nigeria as follows-

“The total amounts mentioned in Sub-Section (1) of Section 1 of the Appropriation Act 2005 which provides for the issue out of the Federation Account of the Federation in respect of the period ending 31st December 2005, of sums not exceeding One trillion, seven hundred and ninety-nine billion, nine hundred and thirty-eight million, two hundred and forty three thousand, one hundred and thirty-eight naira (N1.799.938.243.138.00) shall be increased by one trillion, six hundred and twelve billion (N1.612.000.000.000.00), or equivalent of Twelve billion four hundred million dollars ($12.400.000.000.00), and additional amount should be appropriated to the head of expenditure specified in the schedule to this Act.

“The House of Assembly of each State shall endorse the appropriate expenditure incurred by the Federation for the purpose of paying to the Paris Club the outstanding debt of One trillion six hundred and twelve billion naira (N1.612.000.000.000.00) or equivalent of twelve billion. four Hundred million US dollars ($12.400.000.000.00). This Act may be cited as the Supplementary Appropriation Act 2005.”

According to the explanatory memorandum, “the bill provides for the issue out of the Federation Account an additional total sum of N1.612.000.000.000.00 or equivalent of $12.400.000.000.00 for the payment of outstanding debt to the Paris Club of creditors.”

With this bill, it has become clear that the Federal government was determined to settle the debt once and for all. Also reading the mood of the leadership of the two chambers of the National Assembly ─ the Senate and House of Representatives, it is most probable that the bill would get express approval. This is however not without protestations from some members of the House who are grumbling that the cheque for the 12.4 billion has already been handed over the Paris Club and the bill was sent to the National Assembly for mere formality.

Although, no member of the House was willing to be quoted, those that spoke under the condition of anonymity have accused President Obasanjo of breaching the constitution by going ahead to pay the debt even before the approval of the National Assembly. “We are still consulting among ourselves so that we will know how to handle the matter when we finally start debate on the bill,” was the reaction of one of the House member.

Donald Andoor, This Day (Lagos), November 15, 2005

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Categories: Africa, Nigeria, Odious Debts

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