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Monday, 22 June 2009

Nigerians Questioning WORLD Bank and IMF Loans

As the World Bank and the IMF drastically increase lending to countries in the developing world, local politicians are beginning to question the loans. The Conference of Nigeria Political Parties (CNNP) recently expressed outrage over the ruling People’s Democratic Party plan to obtain a $1-billion loan from the World Bank.

The National Publicity Secretary of CNPP, Osita Okechukwu, says it is wrong for the government to assume more debt when it has yet to account for the $88-billion of oil revenue it amassed between 1999-2008.

"CNPP is outraged that President Umaru Musa Yar'adua is returning Nigeria to Debt Burden, in this instance borrowing from the World Bank Fund meant for Low Income Countries Under Stress (LICUS); notwithstanding the unprecedented rise in oil windfall," the CNPP said in a statement.

The CNPP believes the Nigerian government has more than enough money to pay for infrastructure development and social services without having to take on more foreign debt.

"For the avoidance of doubt these are some of the sources: Oil Revenue today at $70 per barrel, Federal Inland Revenue Service, Customs Duty, Recovery of Billions of USD Looted from our porous treasury, Foreign Direct Investment and Prune down salaries and allowances of Public Officials among others…” it said.

The decision by Nigeria’s government to seek money from the World Bank is an example of developing countries turning to the World Bank’s stimulus funds. World Bank President Robert Robert Zoellick recently announced that the bank plans to increase its lending by more than $100-billion over the next three years. In 2009 alone, the bank is planning to triple its lending from $13.5-billion to $35-billion in order to “to prevent a human catastrophe."

To help funnel money to the developing world, the bank has established a number of fast-track facilities. In doing so, the bank is expected to by-pass many of the procurement rules, environmental standards, and other safeguards that would slow disbursements.

These types of loans to African governments are exactly what Dambisa Moyo, author of “Dead Aid”, criticizes in a recent article for Foreign Policy. Moyo believes that while the recent pull back in commodity prices will have adverse effects on economies across the African continent, they’re still in strong positions of growth.

“While global forecasts for growth hover around just 0.5 percent, the International Monetary Fund is still forecasting a 3 percent growth rate across Africa—despite depressed commodity prices and decreased investment from China,” she writes.

Moyo thinks that perpetually using foreign aid will slow growth and feed corruption while more accountable use of resource revenues, increased trade, foreign investment and a better use of the global bond market will, in the long-run, help these countries establish healthy economies.

Seems the Conference of Nigeria Political Parties wants more Moyo and less World Bank.

Source: Probe International.

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