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By NBF News
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SOME financial experts have expressed worry over the $3.702 billion (N555 billion) external loan sought by the Federal Government for the construction of railway project and other facilities.

They expressed their views in separate interviews with the News Agency of Nigeria in Lagos, saying that this could take the nation back to the debt trap regime witnessed in the 1980s.

NAN reports that the Senate had on Tuesday approved $1.54 billion (N231 billion) out of the total $3.702 billion loans sought by the government.

The upper chamber of the National Assembly also suspended the approval of an external borrowing of $ 1.5 billion (N225 billion) for the construction of railway projects in Lagos and Abuja.

The $1.5 billion (N225 billion) unapproved loan was meant for the development of the Lagos-Ibadan railway modernisation and the Abuja light rail project. The government had sought to secure the loans from the People's Republic of China's Global Facility.

NAN reports that the $1.54 billion loan approved include, $152.2 million from the Expert/Import Bank of China for the Abuja- Kaduna rail line and national security.

It also includes the $315 million from IDA for Public-Private Partnership projects, and $170 million from the FDA for national electricity and gas improvement projects.

A senior lecturer, Department of Economics, University of Lagos, Dr. Paul Adams, said that the external loans might further worsen the nation's economy.

Adams pointed out that the government's request for external loans was due to a lack of financial discipline and uncontrolled government expenditure.

'The government needs to be focused and disciplined to channel its resources to the appropriate purposes for which it was meant for,' he said.

He stressed that one of the effects of external borrowing was that it would increase the nation's total debt profile.

Another lecturer in the Department of Economics, University of Lagos, Dr. Ayodeji Thomas, said that a lack of judicious use of the previous borrowings for infrastructure growth led to the nation's rising external debt.

Thomas said that external loans taken in the past years were not effectively utilised for amenities and infrastructural development.

'There is the need to fast-track infrastructure development to ensure the nation's economic growth,' he said. He said that the increased government borrowing, without recourse to the volatility in the exchange rates could force the private sector out.

Mr. Lekan Salami of Cash Craft Asset Management Limited, said that external loans sometimes were incurred to finance increase in the government expenditure.

Salami explained that borrowing was not bad, but should be carried out with caution, adding that government borrows to finance investment for economic growth.

'The effect of external borrowing is loss of economic activities which can be seen in term of under-utilisation of the nation's resources,' he said.

Salami urged the Federal Government to look inward in creating more revenues by trapping into the non-oil sector, which had been neglected for long. He said that unemployment would be on the increase since money borrowed were not effectively used for infrastructure building that could have attracted investors willing to create jobs.

In his reaction, Mr. Eddie Osarenkhwe, president, Finance Houses Association of Nigeria (FHAN), said that the rising external debt profile would lead to viciously cumulative debts in the near future.

Osarenkhwe said that borrowing would compound the external debt service problems of the nation.

'The intellectual community and those that understand the challenges of economics fundamentals should respond passionately to this challenge of trying to get government to be more responsive in the way it seeks external loans,' he said.