FG predicts new borrowing of N12tn and public debt will reach N50tn by 2023

Government borrowing plan focuses on domestic bonds and concessional external loans

The federal government hopes to raise its stock of public debt to N50.22 billion by 2023, with domestic debt of N28.75 billion and external debt of N21.47 billion.

This is according to the projections of the National Development Plan 2021-2025.

The Debt Management Office had revealed that Nigeria’s public debt stood at 38 billion naira at the end of the third quarter of 2021, with the total stock of debt increasing by 2.540 billion naira in three months from July to September 2021.

This shows that the regime of the president, Major General Muhammadu Buhari (retired), plans to accumulate around 12 billion naira in debt in two years, from 2021 to 2023.

However, based on the plan, the government is aiming for a reduction in total public debt by 2025.

A tabular illustration of the document shows that the government targets debt stock of 39.59 tn for 2021, 46.63 tn for 2022, 50.22 tn for 2023, 50.53 tn for 2024 and 45.96 tn by 2025.

The government also reveals that it needs money to finance the N348.1 billion plan, and the borrowing framework in the plan is 45 percent each for foreign and domestic borrowing.

The plan read in part, “The plan will require an investment of around 348.1 billion naira to achieve the plan’s targets during the period 2021-2025. It is estimated that the government capital expenditure during the period will be 49.7 billion naira (14%) while the balance of 298.3 billion naira (86%) will be incurred by the private sector. Of the 14 percent of the government’s contribution, the capital expenditure of the FGN will be N29.6 billion (9 percent), while the population of subnational governments

“The borrowing framework in the plan is 45 percent each for foreign and domestic borrowing, while other sources of finance represent 10 percent. Domestic bonds and concessional external debt financing, among others, will drive the plan’s borrowing strategies. Thus, the government will improve current debt management strategies to ensure sustainability. ”

Assets must be created to justify debt, infrastructure needs critical, analyst says

An investment analyst, Omosuyi Temitope, said that while the debt service-to-income ratio will exceed even by 2022, the government appears to be borrowing for obvious reasons.

He said: “In fact, the debt service-to-revenue ratio would remain above 80% in 2022, but there are obvious reasons why the government needs to take out more loans.

“First, no nation can achieve sustainable development without certain forms of borrowing to finance projects and programs conducive to growth. Nigeria’s infrastructure needs are essential for its sustainable and inclusive growth.

“Anyone can clearly deduce the negative impact of poor infrastructure on the country’s growth, ranging from the high cost of doing business to the high cost of living in unimpressive general living conditions, to name but a few. -a. “

However, he stressed the need for debt to be sustainable through the creation of assets and value that justify debt.

“Nonetheless, it is imperative that the government ensure that debt obligations are sustainable by creating assets and value that justify soaring debt,” he said.

The current debt ratio is worrying, the borrowing rate is not sustainable – Tella

For his part, an economics professor at Olabisi Onabanjo University, Ago-Iwoye, Ogun State, Professor Sheriffdeen Tella, said the level of debt was concerning and the government should not consider borrow more, urging the government to consider other means of generating income. .

He said: “Even at the level where we are now, it is worrying not to talk about planning to borrow more. It is unfortunate that the government is always thinking about borrowing instead of thinking about other ways to generate income.

“They can ensure that public-private partnership projects are built, once operational and producing capital, although whoever implemented it can generate their money plus interest, then the project becomes ours and we can generate income from them. There are projects that we can scale down until we have enough funds to implement and there are projects that can generate money on their own.

Go after the rich Nigerians, who owe the country instead of borrowing – Economist

“Instead of always thinking about borrowing, the government can go after those who owe the country. funds.”

He added that the pace of government borrowing was not sustainable as the revenues generated would be used for debt service.

“In addition, our borrowing rate is not sustainable, because almost all the revenue generated by the country is used to pay off the current debt and this is why the government does not have enough to pay off a large part of its expenses, ”he added.

Rising debt profile raises sustainability issues – CPPE

An economist and director general of the Center for the Promotion of Private Enterprise, Dr Muda Yusuf, said the government’s growing debt profile raised sustainability concerns.

Yusuf, former director general of the Lagos Chamber of Commerce and Industry, said: “The government’s growing debt profile raises serious sustainability issues. Although the government tends to argue that the condition is not a debt issue, but an income issue. But the truth is, debt becomes a problem if the income base is not strong enough to service the debt on a sustainable basis. It invariably becomes a debt problem.

He also stressed the need to cut spending and implement reforms that can reduce governance costs and lighten the tax burden.

“What is needed is the political will to cut spending and undertake reforms that could reduce the size of government, lower governance costs and ease the government’s tax burden.

“It is imperative that the country functions as the real federation that it claims to be. The unitary character of the country makes it difficult to exploit the economic potential of sub-nationals. It perpetuates the culture of dependence on the federal government.

“There is a need to reduce the size of government and the cost of governance. Fiscal sustainability is determined by both costs and revenues. It is therefore imperative to manage the main cost and revenue drivers. To the extent possible, the government should push back those sectors or areas of activity where the private sector has the capacity to produce the desired results. We should see more concessions and privatizations at all levels of government, ”he said.

He added that the debts, which should be concessional, should be used to strictly finance investment projects that would increase the productive capacity of the economy.

“It is important to ensure that debt is used strictly to finance investment projects that would strengthen the productive capacity of the economy. This is the position of the law on fiscal responsibility.

“In addition, the focus should be on concessional financing, as opposed to commercial debt which is usually very expensive,” he added.

FG Borrowed Irresponsibly – Moghalu

A former vice-governor of the Central Bank of Nigeria and former presidential candidate Kingsley Moghalu condemned the federal government’s constant borrowing, saying it was irresponsible.

He said, “I condemn the borrowing plan in its entirety. I think the Federal Government of Nigeria has irresponsibly borrowed and mortgaged the future of the youth of Nigeria.

“It should stop. The damage will be very difficult to repair. Nigeria does not need to borrow at the rate it borrows and the huge sums it borrows.

“There is an element of insensitivity to that. They go out of their way to borrow before 2023, then walk away and turn it over to someone else.

FG becomes reckless in borrowing – CACOL

The executive director of the Center for Anti-Corruption Open Leadership, Mr. Debo Adeniran, said the government was getting reckless in borrowing at a rapid pace.

He said: “The government is quickly becoming reckless in the way it borrows, yes it could have its reasons for resorting to borrowing due to the infrastructure deficit and collapse that existed before the arrival of this administration. but this administration needed to understand that it could not solve all the problems of over 50 years overnight.

He added that taking out loans at interest is likely to enslave citizens and future generations.

“And taking out loans at interest is likely to enslave us and generations to come. Most of the countries that give us loans trap us like China. All the infrastructures for which we use their loans to build are very sensitive and if they want to take them back, the Nigerians will suffer ”, he added.

He advised the government to recover the looted funds, which would be useful in financing infrastructure projects.

“What I think the government could have done is recover the looted funds and what the looters bought with the proceeds of their crime, that will go a long way in closing some of the infrastructure gaps that we are filling with. loans, ”he said. noted.

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