Peter Obi,
presidential candidate of the Labour Party (LP), says the federal government
should restrict borrowings to a statutory 5 percent of the previous year’s
revenue.
Obi disclosed this on Thursday on his verified
Twitter page, warning
that Nigeria must limit borrowing for consumption.
In 2020, the federal government exceeded 3 percent fiscal
borrowing threshold because of the COVID-19 pandemic.
The fiscal responsibility law provides a limit of 3 percent debt threshold for sustainability — but the president can “exceed the ceiling if there is a clear and present threat to national security or sovereignty of Nigeria”.
The presidential candidate also warned that most states that
received fiscal bailouts did not invest them properly.
“As a matter of urgency, Nigeria must stop borrowing for
consumption, but only borrow to invest in regenerative development projects and
other productive ventures,” he said.
“It’s ironic that states that received fiscal bailouts did
not repay the loans and are still borrowing beyond their revenue earnings.
“Also, it has become
imperative to restrict federal borrowings to the statutory 5 percent of the
previous year’s revenue.”
In 2021, Obi advised
the federal government to invest the funds being borrowed in
profitable ventures to enhance the nation’s socioeconomic development.
According to him, debt is not bad when rightly applied and
used for investment that will improve the economy, but that borrowing for
consumption is bad.
Obi said more people would be thrown into poverty if the
government fails to invest in those things that would improve the economy.
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