Stop Borrowing, Experts Beg Buhari Govt as Debt Servicing Hits N28tr.
Leaders and economists have urged the current administration to eliminate deficit-induced borrowings, citing the growth in Federal Government votes for debt servicing and its detrimental influence on development initiatives.
Between 2016 and 2021, N13.465 trillion was spent on loan servicing, just as the National Assembly approved the government’s proposal to spend N14.6 trillion on debt servicing over the next three years in the 2022-2024 Medium-Term Expenditure Framework (2022, 2023 and 2024).
The N14.6 trillion approved for the same reason in the next three years totalled N13.465 trillion, for a total of N28.1 trillion.
Concerns have also been made about the rising budget deficits, which the administration has cited as the primary cause of the massive borrowings.
The government’s total budget deficits have reached N20.5 trillion in the recent six years (2016-2021). For example, in 2016, the government budget was N6.6 trillion, with a revenue prediction of N3.86 trillion and a deficit of N2.2 trillion. Debt servicing was planned at N1.475 trillion.
The N7.4 trillion budget of 2017 was based on an income of N4.9 trillion and a deficit of N2.36 trillion. To service debt, N1.488 trillion was approved.
The 2018 budget was N9.12 trillion, with a deficit of N1.95 trillion, based on an income of N7.17 trillion. In addition, debt servicing was projected at N2.203 trillion.
Also, the N8.916 trillion budget for 2019 was based on an income of N7.92 trillion and a deficit of N1.86 trillion. A total of N2.254 trillion was set aside for debt repayment.
Worse was the COVID-19 year of 2020, which had a budget of N10.59 trillion. The debt servicing budget was set at N2.72 trillion.
“Overall, a total of N6, 598.96 billion deficit was recorded in 2020, indicating a budget-to-GDP ratio of 4.33 per cent, which is over the goal rate of 3.30 per cent,” according to the Central Bank of Nigeria’s (CBN) fourth quarter and consolidated 2020 budget implementation report.
Furthermore, the N13.59 trillion budget for 2021 contains a deficit of N5.60 trillion, with debt payment costs of N3, 324,380,000 trillion.
The Federal government sanctioned spending of N3.6 trillion, N4.9 trillion, and N6.1 trillion on debt servicing for the respective years, bringing the total to N14.6 trillion in the three years, according to the 2022-2024 Medium-Term Expenditure Framework/ Fiscal Responsibility Act (MTEF/FSP) recently passed by the National Assembly.
Dr Timothy Olawale, Director General of the Nigeria Employers’ Consultative Association (NECA), lamented the government’s increased borrowings to fund the non-productive segment of the economy in an exclusive interview with The Guardian.
He challenged politicians to build the capacity and confidence to undertake fundamental political reforms that would minimise waste and costs of governance.
“We are breaking the Fiscal Responsibility Act, which stipulated that the deficit should not exceed three per cent,” said former Benue State governor Gabriel Suswam.
Minister of Finance, Budget, and National Planning Zainab Ahmed also spoke, saying that the government is striving to reduce borrowing to fund key infrastructure and budgets.
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