Nigeria’s debt stock, according to Dr. Muda Yusuf, the Chief Executive Officer (CEO) of Centre for the Promotion of Private Enterprise (CPPE), may within the shortest possible time hit N50 trillion.
Speaking at an event to present the 2022 first-quarter economic review of CPPE in Lagos, Yusuf argued that Nigeria’s debt is unsustainable considering the present realities.
He said, “The rising debt profile of government raises serious sustainability concerns. The Debt Management Office had reported that total public debt was N39.56 trillion as of December 2021. About 11.3% of this debt is owed by the states and FCT.
“However, when we take account of borrowings from the CBN and the stock of AMCON debt, the debt profile would be in excess of N50 trillion.”
Yusuf lamented that the government’s actual revenue could hardly cover the recurrent budget, which implies that the entire capital budget and part of the recurrent budget are being funded from borrowing which is not sustainable.
“We cannot continue to increase borrowing on account of the relatively low debt/GDP ratio.
“We do not service debt with GDP, but with revenue. Close to 40% of our GDP do not contribute appreciably to revenue,” he argued.
The CPPE chief, therefore, advised the government to adopt the political will to cut expenditure and undertake reforms that could scale down the size of government, reduce governance costs, ease the fiscal burden on the government, and boost revenue.
“It is important to ensure that the debt is used strictly to fund capital projects, especially infrastructure projects, that would strengthen the productive capacity of the economy.
“The unitary character of the country is making it difficult to unlock the economic potentials of the subnational. It is perpetuating the culture of dependence on the federal government,” the former Director-General (DG) of the Lagos Chamber of Commerce and Industry (LCCI) explained, as he maintained that it is important for Nigeria to operate as a true federation.