Nigeria’s revenues are not enough to cover the budget as total debt could reach 50 billion naira – Report
The Center for Promoting Private Enterprise said Nigeria’s debt, including that of the Asset Management Corporation of Nigeria and borrowing from the Central Bank of Nigeria, could reach N50 trillion in the most promptly.
This was stated by CPPE Chief Executive Dr Muda Yusuf during an event to present the CPPE Lagos State First Quarter 2022 Economic Review, Punch reports.
Yusuf also advocated concessional financing for the country, as opposed to expensive trade debts.
He said: “The government’s growing debt profile raises serious sustainability concerns. The Debt Management Office had reported that the total government debt was N39.56 billion as of December 2021. About 11.3% of this debt is owed by the states and the FCT.
“However, if we factor in CBN borrowings and outstanding AMCON debt, the debt profile would exceed N50 trillion.”
Although the government tends to say that Nigeria does not have a debt problem, the country has a revenue problem, he said.
He explained that debt would generally become a problem if the revenue base was not strong enough to sustainably pay it off.
Actual government revenue could barely cover the operating budget, implying that the entire capital budget and part of the operating budget is financed by borrowing which is unsustainable, he said. .
He said: “We cannot continue to increase borrowing due to the relatively low debt-to-GDP ratio.
“We do not serve the debt with the GDP, but with the income. Nearly 40% of our GDP does not contribute appreciably to income.
Yusuf said the government should have the political will to cut spending and undertake reforms that could reduce the size of government, reduce governance costs, ease the government’s tax burden and increase revenue.
“It is important to ensure that debt is used strictly to finance investment projects, especially infrastructure projects, which would strengthen the productive capacity of the economy,” he said.
The former chief executive of the Lagos Chamber of Commerce and Industry said it was imperative that the country function like the true federation it claims to be.
He said, “The unitary character of the country makes it difficult to unleash the economic potentials of the sub-national. It perpetuates the culture of dependency on the federal government.
“There is a need to reduce the size of government and the cost of governance. It should be noted that fiscal sustainability depends on both costs and revenues. Therefore, managing key cost and revenue drivers is imperative. »