Despite Nigeria’s difficulty in meeting its debt repayment obligations, with the cost of servicing the debt exceeding the federal government’s retained earnings by 310 billion naira in the first four months of this year, the government plans to borrow over N11 trillion to finance the 2023 budget.
The Minister of Finance, Budget and National Planning, Zainab Ahmed revealed this last week during the presentation of the Medium Term Expenditure Framework (MTEF) 2023 to 2025 and the Budget Policy Paper (FSP) at the House Finance Committee, to the dismay of the entire nation.
The planned borrowing for 2023 would take the country’s debt well above N52 trillion.
Patience Ohia, Director General of the Debt Management Office, had on Thursday during her appearance at the Commitment on the Medium Term Expenditure Framework (MTEF) 2023 – 2025 and Fiscal Policy Paper organized by the Finance Committee House of Representatives said the country’s debts at the end of March this year stood at N41.60 trillion.
The current administration’s penchant for borrowing is legendary. Its appetite for debt accumulation has almost quadrupled the country’s public debt, from N12.118 billion at the end of May 2015, when President Muhammadu Buhari took office, to its current figure. The country’s debt profile has increased by more than 29 trillion naira in just seven years. This has heightened the concerns of many Nigerians who are not only concerned about the government’s ability to repay the debt, but are also worried that the country will find itself in the same dilemma as before the cancellation of the debt of 2005, when she was weighed. by the debt burden and has been unable to adequately finance critical sectors such as health, education and infrastructure.
As a result of the country’s high debt profile, the cost of servicing debt has skyrocketed. In 2014, Nigeria spent 712 billion naira on debt service but this increased to 943 billion naira in 2015, 1.48 trillion naira in 2016, 1.84 trillion naira in 2017, 2014 trillion naira in 2018, 2.09 trillion naira in 2019, this increased to 2.452 trillion naira in 2020 and 4.22 trillion naira in 2021.
Two factors are responsible for the government’s wanton thirst for foreign debt. The first is the illusion that the ratio of debt to gross domestic product (GDP) is within reasonable limits. Mrs. Zainab Ahmed has said endlessly that the nation’s debt, which currently stands at 23.27% of its GDP, is safe. She also said, however, that while the country doesn’t have a debt problem, it has a revenue problem. But the fact is that it is the income problem that causes the debt burden. When a country shows a flagrant lack of capacity to manage its resources, it prepares the ground for resorting to borrowing.
The second factor is that with willing lenders such as China and the World Bank Group, members of government do not have to be creative in revenue generation as they can easily access funds borrowed from others. With this mindset, the rulers, who are supposed to come up with creative solutions to societal problems, are, through their lack of creativity and their insatiable appetite for loans, mortgaging the future of the country to maintain their mode of current life. Maybe it is not clear to them, but the way those who run the country are racking up the debts, the unborn generations of Nigerians are already doomed to long-standing servitude.
Therefore, the federal and state governments must curb their campaign of debt accumulation. To increase the country’s debt by nearly 400% in just seven years without growing the economy at the same rate is scary enough. This trend is particularly worrying because the current administration promised frugality before it came to power. While wooing Nigerians for votes, the All Progressives Congress (APC) had condemned the Jonathan administration for its alleged debauchery with the promise to walk a new path. But what has changed now if, in just seven years, the country’s debt profile has increased by almost 400%?
Perhaps the population would have been comforted by the unprecedented increase in debt if there had been a corresponding level of development. But what projects have been financed with gargantuan debt? What structures can we invoke to justify the constant increase in debt? Where are the factories built with the borrowed money? Where are the new jobs created? Where are the hospitals built? Where are the new airports? Where are the new roads? Where did all the money go? The fact is that governments have used most of the borrowed money to finance recurrent expenditures. Most of the trillions borrowed went to run the government; pay salaries and allowances. It’s not just tragic, it’s extremely heartbreaking.
According to the former acting accountant general of the federation (AGF), Anamekwe Nwabuoku, part of the borrowed money is used to pay salaries.
Nwabuoku, who spoke at a retreat organized by the AGF office for members of the Technical Sub-Committee on Cash Management (TSCM) in Abuja before his dismissal, said: “We need to borrow to increase the payment of wages and salaries. It shows that we are going through a very difficult time. Government revenues are highly contested.
If the borrowed money is spent on consumption, where does the hope of repayment lie? The implication of this is that unless there is an about-face, the heavy debt burden will stunt the country’s development, deepen the poverty of the people and drive future generations of Nigerians into bondage. for atrocious debts. The time has come to stop excessive borrowing. Otherwise, the memory of the current generation of Nigerian leaders by future generations of Nigerians would not invoke joy, but sadness; not pride but regret; no prayer but curses.
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