ECONOMIC EXPERTS CAUTION FG AS DEBT SERVICING EXCEED 3% FISCAL RESPONSIBILITY ACT AT N28TRILLION
Economic experts have emphasized the negative impact on developmental projects while cautioning the FG against additional borrowings. The call to do away with deficit-induced borrowings was made as over N13.465 trillion has been spent on loan servicing between 2016 and 2021.
The admonition became paramount as the National Assembly approved the 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). With this approval, the cumulative debt would hit N28trillion, economic experts warn.
As governments cumulative budget deficits in the last six years, (2016 to 2021) hit N20.5 trillion, concerns are rife against this continuous spike in budget deficits, which the government had given as the main reason for the excessive borrowings.
Statistics available show an upward trend in the budget for debt servicing from N1.475 trillion in 2016 through N2.254 trillion in 2019 to N3, 324,380,000 trillion in 2021, without much noticeable reduction in the debt been serviced recorded.
Analysis of the fourth quarter and consolidated 2020 budget implementation report of the Central Bank of Nigeria (CBN), shows us a total of N6, 598.96 billion deficits were recorded in 2020, representing a budget-to-GDP ratio of 4.33 percent which is above the target rate of 3.30 percent.”
Eons Intelligence gathered from the just-passed 2022-2024 Medium-Term Expenditure Framework/ Fiscal Responsibility Act (MTEF/FSP) by the National Assembly that the Federal government has approved the spending of N3.6 trillion, N4.9 trillion, and N6.1 trillion on debt servicing for the Year 2022, 2023 and 2024 respectively, thereby bringing the total to N14.6 trillion for the three years.
Dr. Timothy Olawale, Director General of Nigeria Employers’ Consultative Association (NECA), while lamenting on the rising borrowings urged political leaders to develop the capacity and courage to embark upon major political reforms that would reduce wastage and cost of governance.
In the same vein, former Benue State Governor, Gabriel Suswam, stated that “We are literally violating the Fiscal Responsibility Act, which stated that deficit should not be beyond three percent.”
However, Minister of Finance, Budget, and National Planning, Zainab Ahmed, reiterated that the government was working towards reducing borrowing to fund critical infrastructure and budgets.