[DEBATE] : (Fwd) Nigerian newspaper blasts WB loans

[Patrick Bond]

(The attention to detail in this critique is nearly unprecedented, in my 
experience with these mainstream newspapers. A formidable rebuttal to 
Washington!)


http://www.ngrguardiannews.com/editorial_opinion/article01//indexn2_html?pdate=220509&ptitle=World%20Bank%20loan%20for%20budget%20deficit 
<http://www.ngrguardiannews.com/editorial_opinion/article01//indexn2_html?pdate=220509&ptitle=World%20Bank%20loan%20for%20budget%20deficit>? 


World Bank loan for budget deficit?

A CONCESSIONARY World Bank loan for Nigeria aimed at tiding over 
financing gaps in the 2009 budget featured in the discussions held at 
this year's World Bank/IMF Spring Congress in Washington, D.C., USA. 
Finance Minister Mansur Muhtar, who is accountable to the Nigerian 
people, merely glossed over the talks as exploratory. But World Bank 
Country Representative Onno Ruhl, assuming the responsibility that 
ordinarily devolves primarily on the leader of the country team, duly 
addressed a press conference in Abuja and revealed that negotiations for 
four projects were successfully completed.

The conclusions are astounding. The first project is an overarch. Having 
fleeced the country while acting as agents of the Paris and London clubs 
of creditor countries, the World Bank/IMF seek to perform similar 
exploits as agents of private international oil companies operating 
under Nigerian jurisdiction in "getting more enforceable commercial 
framework about the supply of gas" for local generation of electricity. 
The multinational oil companies (MOCs) neither relate to their home 
governments via the auspices of the World Bank/IMF nor have the latter 
been involved in the supply of gas and crude oil by various oil and gas 
producers to the world market.

Instructively the same MOCs have been unconventionally lobbying the 
National Assembly to delay interminably the passing of a number of oil 
sector reform bills that are meant to spell out the ground rules and the 
necessary framework for oil sector operations in the country. Plans by 
World Bank/IMF to accord Nigeria-based MOCs the status of sovereign 
states subvert and contravene provisions of the 1999 Constitution. Our 
national interest will be best served by passing the raft of oil sector 
bills into law to allow any dissatisfied oil company to opt out of the 
country.

The second negotiated project involves funding to have the way for every 
Nigerian household to own at least two insecticide-treated mosquito bed 
nets. The World Bank/IMF even drafted the leader of the Christian 
Association of Nigeria and the Sultan to Washington, D.C. to prepare 
them to help popularise the bed nets among the faithful. But it is not 
the place of World Bank/IMF and least of all Nigerian faith leaders to 
foist mosquito nets produced by private companies in developed countries 
upon impoverished Nigerians. Government should instead create the right 
investment climate to enable Nigerian entrepreneurs to manufacture 
impregnated bed nets locally so as to boost employment and arrest 
pervasive poverty.

The third project concerned the control of HIV/AIDS, attempts to 
implement the Gleneagles G-8 summit directive that developing countries 
commit in advance to purchase products of Western medical research into 
the various pandemics. However, it is not beneficial for Nigeria to 
obtain a World Bank loan in order to support Western medical research 
and drug exports. Any government action in this regard should be geared 
to fund local research into those diseases.

Apart from not being the priority items in the 2009 budget, both the 
second and third projects promote current consumption and 
import-dependency whereas what the country needs are 
development-enhancing projects that generate self-liquidating streams of 
income.

The fourth negotiated project curiously relates to funding for secondary 
school education. A few years after articulate stakeholders offered 
cogent reasons for rejecting World Bank funding for the universities, 
government preference for this project leaves much to be desired. 
Nigeria should independently fund secondary school education.

Further obnoxious implications of the so-called concessionary World Bank 
loans include the fact that over 50 per cent of their value is routinely 
expended on technical and consultancy fees (that incorporate kickbacks 
for recipient country government top shots) paid to foreign experts. The 
balance is tied to imports of overpriced items from particular developed 
countries while such projects are so poorly executed that additional WB 
loans are recommended. Worse still, loan recipient countries lose their 
independence of action to the World Bank/IMF, which proceed to pursue 
policies that are injurious to the countries' interests but favour 
developed nations. Government should shun subtle Western ploys to 
recolonise Nigeria.

Notwithstanding the country's present low debt service ratio, it is 
clear from the foregoing that a World Bank loan is a poisonous remedy 
for the treatment of budget deficit. It is therefore imperative for the 
country to operate within her means by scaling down the 2009 budget. We 
had noted last December 16 that the budget was not right, a fact that 
Mr. President has now confirmed by terming the 2009 budget faulty. 
Constituency projects and similar extraneous insertions in the budget 
should be expunged. There is need to plug all areas of wastage such as 
inflated salaries and duplicated perks for the governing political elite 
while the MDAs should discountenance any demand by legislators for 
under-the-table payments in return for less than diligent supervision.

Government should show Nigerians evidence of faithful implementation of 
the budget by rendering quarterly reports. It is not enough to give the 
amounts released; there should be detailed statements of expenditure on 
each project and the completion level attained. There should also be 
regular and detailed information on current government revenue receipts 
and other available financial resources.

To finance the revenue gap, government has at its disposal, one, the 
excess crude account. How much resides in this account and how is it 
being deployed? Two, the foreign reserves become quite handy as their 
size in January was thrice the total federal budget initially presented 
to the National Assembly. Three, there are staggering proceeds of bonds 
(without requisite legislative backing contrary to financial and 
accounting best practice) arising from restructured treasury bills or 
mopped excess liquidity, which average some N1 trillion annually and 
which today have pushed the domestic national debt above N3.3 trillion.

Unfortunately, unlike inflation and deficit-combating conventional bonds 
that are made up of the spare resources of subscribers, these byproducts 
of faulty monetary policy management, on which the country is made to 
pay 10-17 per cent interest per annum, are hyper-inflationary and are 
therefore neither reflected in the federal budgets nor ploughed into any 
tangible investments. Latest CBN data indicate that repatriated proceeds 
on money market securities such as restructured bonds and treasury bills 
alone exceed $200 million monthly, a veritable dash to foreign interests 
while the administration goes a searching for entrapping World Bank 
bridging loan. To stem this leakage, the CBN should end the illegal 
practice of printing naira equivalents of dollar receipts in the 
Federation Account for sharing among the three tiers of government.

As regard loss of revenue occasioned by what the administration has 
euphemistically termed the situation in the Niger Delta, we hold that 
urgent reversal of the trend is vital to the national interest and 
therefore implore government to respect the legitimate demand of the 
people of that part of the country for a just federation. In general 
through good management of the available but largely wasting resources, 
this administration is in a position in 2009 to run the economy at full 
speed. There is absolutely no need for any rueful budget supplementation 
from abroad.
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