Worried about the rise in Federal Government’s votes for debt servicing and their negative impact on development projects, leaders and economic experts have urged the current administration to do away with deficit-induced borrowings.
Between 2016 and 2021, N13.465 trillion has been spent on loan servicing, just as the National Assembly approved government’s plan in the 2022-2024 Medium-Term Expenditure Framework to spend N14.6 trillion to service debt in the next three years (2022, 2023 and 2024).
A total of N13.465 trillion was the N14.6 trillion approved for same purpose in the next three years, amounting to N28.1 trillion.
Concerns are also being expressed against the rise in budget deficits, which government had adduced as main reason for the huge borrowings.
It has been observed that in the last six years (2016 to 2021), government’s total budget deficits hit N20.5 trillion. For instance, in 2016 when the federal budget was N6.6 trillion based on a revenue projection of N3.86 trillion with a deficit of 2.2 trillion, some N1.475 trillion was budgeted for debt servicing.
In 2017, the budget of N7.4 trillion was based on revenue of N4.9 trillion with a deficit of N2.36 trillion. N1.488 trillion was voted to service debt.
The 2018 budget was N9.12 trillion based on revenue of N7.17 trillion with a deficit of 1.95 trillion. And the sum of N2.203 trillion was budgeted for debt servicing.
Also, the 2019 budget, which was N8.916 trillion premised on revenue of N7.92 trillion with a deficit of N1.86 trillion. The sum of N2.254 trillion was reserved to service debt.
The COVID-19 year of 2020 with a budget of N10.59 trillion was worse. The sum of N2.72 trillion was budgeted for debt servicing.
According to the fourth quarter and consolidated 2020 budget implementation report of the Central Bank of Nigeria (CBN), “overall, a total of N6, 598.96 billion deficit was recorded in 2020, representing a budget-to-GDP ratio of 4.33 per cent which is above the target rate of 3.30 percent.”
Besides, the 2021 budget of N13.59 trillion has a deficit of N5.60 trillion with N3, 324,380,000 trillion for debt servicing.
However, the 2022-2024 Medium-Term Expenditure Framework/ Fiscal Responsibility Act (MTEF/FSP) just passed by the National Assembly, 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.
In an exclusive interview with The Guardian, Director General of Nigeria Employers’ Consultative Association (NECA), Dr Timothy Olawale, deplored the rising borrowings by government to fund non-productive sector of the economy.
He urged political leaders to develop the capacity and courage to embark upon major political reforms that would reduce wastage and cost of governance.
Some lawmakers, including former Benue State governor, Gabriel Suswam, noted: “We are literally violating the Fiscal Responsibility Act, which stated that deficit should not beyond three per cent.”
Also speaking, Minister of Finance, Budget and National Planning, Zainab Ahmed, stated that government was working towards reducing borrowing to fund critical infrastructure and budgets.
(Guardian)
