Experts want FG to use IMF loan for the purpose intended

Some financial experts have urged the federal government to use the loan approved by IMF for the purpose intended so as to help sustain the country’s economy.

The experts, Mr Phil Aragbada and Mr Sola Famakinwa, disclosed this in separate interviews with the News Agency of Nigeria (NAN), in Ibadan on Wednesday.

Aragbada, an ex-banker, said that the government’s move was in the right direction as “it is when people are alive that they can be productive, so sustaining lives is crucial at this time.”

He said the pandemic had caused serious economic problems for Nigeria, particularly with the slump in global oil prices.

Aragbada said it was imperative for states to have their share of the money as indicated by the national assembly as most states were in financial difficulties at this time.

“We just have to prepare for the worst and expect the best because the normal economic theories cannot actually work at this time.

“Ordinarily, when the government takes a loan, it is expected to be used for productive fiscal measures that will accrue lots of revenue.

“But as things stand now, what we are just doing is to save human lives as being done in other climes, though we cannot compare ourselves to the United States of America,” Aragbada said.

The former General Manager, Corporate Affairs, Skye Bank and a former editor at the defunct Sketch newspaper, said it was important for money to be in circulation, adding that keeping consumption going would aid productivity.

“The only danger is that we operate a mono-product economy. The price of oil in the global market had collapsed.

“The cost of selling oil now is far lower than the cost of producing it. The implication of that is that it is a negative revenue to Nigeria.

“So, we need the loan, but it should be used to finance what it is intended for,” he said.

Also, Famakinwa, a Micro-concept, Finance and Management consultant said that the fund was not meant for economic development, but emergency fund to tackle COVID-19 in Nigeria.

“My fear is that the fund should be used for its purpose and not diverted to finance other things.

“The 3.4 billion dollars IMF loan will attract 1.05 per cent interest payable within four years. This action will increase our external debts, Nigeria will have to service more debts.

“With the price of crude oil having dropped drastically, Nigeria will have to expand its tax net.

“More debts will make the economy get worse, while the naira will be devalued, this will affect many businesses in Nigeria,” he said.

He said  that if productivity was boosted as well as the manufacturing sector aided, the country would survive the effect of COVID-19 on its own in the shortest possible time. (NAN)