Nigeria’s swelling debt profile without a commensurate infrastructural development has become of great concern to many Nigerians.
For economic experts, the situation would spell doom for President Muhammadu Buhari’s successor as from May 29, 2023.
Just recently, the Debt Management Office, DMO, said Nigeria’s total debt stock would hit N77tn in May 2023 if the National Assembly okayed the Buhari administration’s 23.8 trillion Ways and Means Advances.
Contrary to the Central Bank Act of 2007 (Section 38.2), which caps advances to the Federal Government of Nigeria at 5 percent of last year’s revenues, the country’s apex bank has given FGN 55.3 trillion ways, and means advances since Buhari assumed office.
Meanwhile, the Federal Government stated that it spent over 80 percent of its revenue on debt servicing in the first eleven months of 2022.
Former CBN Governor, Sanusi Lamido, Deputy CBN Governor, Kingsley Moghalu and economist Doyin Salami had at different fora, accused the bank of flaunting its law.
The Minister of Finance and Budget and National Planning, Mrs Zainab Ahmed, on her part, had said there is no cause for alarm over the country’s debt profile because the nation has no records of default.
But experts say the significant implication is the government’s over-reliance on short-term borrowing to finance its operations, as the government has had to pay higher interest rates to attract investors and for flaring inflation.
Reacting to the development in a chat with DAILY POST, A financial inclusion/wealth management expert, Mr Idakolo Gbolade said the incoming government needs to be worried about the country’s soaring debt profile.
He said, “The outgoing government has been financing the budget through deficit spending and the 2023 budget will not be an exception.
“However, an anticipated increase in our debt stock to 77 Trillion Naira will have severe implications for the incoming government because it will incur higher costs in debt servicing and significant infrastructure projects will be affected.
“This will strain capital projects implementation in 2023 and could lead to poor budget achievement.
“If you look at countries like the United States, for example, that carries the highest debt stock in the world, you will discover that the economy is adequately regulated with a debt ceiling that is always debated by the United States Congress yearly before approval despite the fact the economy of the US has the capacity for the debt stock. This cannot be said of Nigeria.
“The Nigerian people should ask questions from all those aspiring to govern us and not just vote out of primordial sentiments.
“The country cannot afford to service debts of up to N77 trillion presently unless the government creates more avenues for revenue growth.”
Also, an Accounting and Financial Development don at Lead City University, Ibadan, Prof Godwin Oyedokun said the fears about Nigeria’s growing debts are justified as Buhari is on the verge of mortgaging the future of unborn children.
“It is not a crime to borrow to finance any expenditure profile of the government. My problem is that your expectations have been affected by the borrowing based on your repayment structure. You will run into issues if you want to buy Limozin and then go back to borrow. Everything you want to do is something you rely on borrowing.
“As expected, you would borrow to the extent that the condition of borrowing will lead to the extinction of the country, but when you borrow from a very toxic creditor, it will tell you that don’t do certain things unless you take permission from us. That is, economic gurus will tell you that the conditions precedence that follows is important because it will determine the development of the country.
“No financier will lend to you without asking you for something in return. Borrowing is not bad; it is when you borrow without applying sense. I don’t want to believe that those charged with our economy do not understand the principle and politics of borrowing. One regime used theirs to advocate for debt forgiving, and another advocated for more borrowing.
