The Lagos Chamber of Commerce and Industry (LCCI), has warned President Muhammadu Buhari against incurring more debt to fund Nigeria’s economy.
Addressing journalists on the condition of the country’s economy, President, LCCI, Asiwaju Michael Olawale-Cole said the debt stock is alarming, adding that incurring more is detrimental for the nation.
While lamenting the alarming debt stock of the country, the LCCI President stated that the Buhari-led government spent a chunk of its revenue last year (2021) on debt servicing.
Olawale-Cole’s words: “The Federal Government spent N2.89 trillion on debt servicing between January and August 2021. This figure represents 74% of the total revenue of N3.93 trillion generated by the Federal Government within the same period, a development considered to be a dangerous trend for the economy.
“On the amendment of the Fiscal Responsibility Act to enable government to borrow for ‘critical reforms of significant national impact’ (which are not defined), we urge caution as this may lead to abuse of definition of what is ‘significant national impact’.
“Our concerns are founded in the rising debt stocks of the government and wonder what the levels may become when more room is created for more borrowing.”
What you should know about Nigeria’s debt profile
Recently, the National Assembly approved Buhari’s request of $5.8 billion loan and a grant of $10 million.
The legislature’s endorsed the President’s loan request despite how the debt stock went up in 2021. Disregarding warnings from experts and international bodies, the federal government secured approvals for a series of financial instruments, which are $8.3 billion, €490 million and $6.1 billion.
As at last year’s December, the combined foreign debt stock of the Federal Government, 36 states, and Federal Capital Territory stood at $37.9 billion.
Prior to the LCCI’s latest warning, World Bank listed Nigeria among the top 10 countries with high debt risk exposure.