The Nigeria Employers’ Consultative Association, NECA, Monday expressed fears over Nigeria’s mounting debt burdens, following the release of the third quarter report of the Debt Management Office, DMO, and the 2019 budget assumptions.
Speaking in Lagos, Mr. Timothy Olawale, the Director-General of NECA, said: “Figures released by the DMO showed that the Federal Government’s domestic debt profile rose to N15.814 trillion in September, 2018 from N15.629 trillion in June, 2018 (1.19% increase).
”This figure becomes more worrisome when we look at the total public debt stock, comprising the external and domestic debt of the FGN, the 36 states and the FCT hitting the US$73.208 billion (N22.38 trillion) recorded in June, 2018.
“This trend, which is very disturbing, could have a negative effect on the developmental capacity of Nigeria, despite government’s financial managers’ argument that the rate of increase is within a manageable limit.
”Financial experts at the International Monetary Fund, IMF, and the World Bank have, in fact, advised that the revenue-to-debt ratio is unsustainable and it portends a serious danger for the future generation.
“While the effect of the increasing debt may not be immediate in totality, it could be catastrophic in the long term with a chunk of revenue consumed by debt servicing to the detriment of infrastructural development.
”This, sadly, is the current reality as N2.140 trillion from the N8.8 trillion proposed 2019 budget, has been earmarked for debt servicing, representing about 25% of the total budget allocation.”
While discussing the implication of government’s huge borrowing in the domestic market, Olawale declared that “the size of government borrowing in the domestic financial market also continues to be a major source of concern as this has in no small measure, affected the chances of the real sector to access funding at a reasonable cost.”
On way out, he advised that “the federal and state governments, as a matter of urgency, must take deliberate steps aimed at cutting the cost of governance and recurrent expenditure.
”Government also needs to start paying serious attention to workable investment schemes, collaborating strongly with the private sector which is the engine room for economic growth. Government has to recognize the important role of the private sector in building a robust economy, as oil revenue alone is not enough to place the country on the path of sustainable development. ”Government must, therefore, make commitment to facilitate a favourable environment with policies that will attract private investors.”
