Nigeria’s debt, including that of the Asset Management Corporation of Nigeria and borrowings from the Central Bank of Nigeria, could reach N50 trillion in the shortest time, according to the Centre for the Promotion of Private Enterprise.
Dr. Muda Yusuf, the Chief Executive Officer of the CPPE, stated this during an event in Lagos on Monday to present the CPPE’s first quarter economic review for 2022.
Yusuf also advocated for concessionary financing for the country, rather than expensive commercial debts.
“The government’s rising debt profile raises serious sustainability concerns,” he said. According to the Debt Management Office, the total public debt as of December 2021 was N39.56 trillion. The states and the FCT are responsible for 11.3 percent of the debt.
“However, when borrowings from the CBN and the stock of AMCON debt are factored in, the debt profile exceeds N50 trillion.”
Although the government claims that Nigeria does not have a debt problem, he claims that the country has a revenue problem.
He explained that debt becomes a problem when the revenue base isn’t strong enough to service it on a long-term basis.
He claims that the government’s actual revenue is insufficient to cover the recurrent budget, implying that the entire capital budget and a portion of the recurrent budget are funded through borrowing, which is unsustainable.
“Because of the relatively low debt-to-GDP ratio, we cannot continue to increase borrowing,” he said.
We pay off debt with revenue rather than GDP. Nearly 40% of our GDP does not contribute significantly to revenue.”
According to Yusuf, the government must have the political will to cut spending and implement reforms that will reduce the size of government, lower governance costs, reduce the fiscal burden on the government, and increase revenue.
“It is critical to ensure that debt is strictly used to fund capital projects, particularly infrastructure projects, that will strengthen the economy’s productive capacity,” he said.
According to the former Director General of the Lagos Chamber of Commerce and Industry, the country’s ability to function as a true federation, as it claims, is critical.
“Unlocking the economic potentials of the subnational is difficult due to the country’s unitary character,” he said. It encourages a culture of reliance on the federal government.
The size of government and the cost of governance must be reduced. It’s important to remember that both cost and revenue drive fiscal sustainability. As a result, managing the major cost and revenue drivers is critical.”
