Ben Akabueze, director-general of the budget office of the
federation, says Nigeria’s borrowing space keeps reducing due to the inability
to service debt.
Akabueze spoke on Wednesday during the induction of
newly-elected lawmakers of the 10th national assembly in Abuja.
He said the ratio of the country’s budget to its gross
domestic product (GDP), unlike other countries, is less than its needs.
“While the size of the federal government budget for 2023
created some excitement, the aggregate budgets of all governments in the
country amount to about N30 trillion. That is less than 15 percent in terms of
ratio to GDP, ” Akabueze said.
“Even on the African
continent, the ratio of spending is about 20 percent. South Africa is about 30
percent, Morocco is about 40 percent and at 15 percent, that is too small for
our needs.
“That is why there is fierce competition for the limited
resources. That can determine how much we can relatively borrow. We now have
very limited borrowing space, not because our debt to GDP is high, but because
our revenue is too small to sustain the size of our debt. That explains our
high debt service ratio.
“Once a country’s debt service ratio exceeds 30 percent,
that country is in trouble and we are pushing towards 100 percent and that
tells you how much trouble we are in. We have limited space to borrow.
“When you take how
much you can generate in terms of revenue and what you can reasonably borrow,
that establishes the size of the budget. The next thing would be to pay
attention to government priority regarding what project gets what.
“The budget is not a shopping list. In the end, the budget
only contained expenditure.”
Earlier this year, Zainab Ahmed, minister of finance, budget
and national planning, said the overall deficit for the 2023 budget is N11.34
trillion, representing 5.03 percent of the country’s gross domestic product
(GDP).
Ahmed said the budget deficit would be financed mainly by
borrowings; noting that N7.04 trillion would be sourced from domestic sources,
N1.76 trillion from foreign sources, and N1.77 billion from multilateral and
bilateral loan drawdowns, while privatisation proceeds would provide N206.18
billion.
As of December 2022, Nigeria’s total public debt had hit
N46.25 trillion.
Recently, the senate retroactively approved a N22.7 trillion
loan that had been spent by the executive arm of the government.
On Wednesday, President Muhammadu Buhari wrote to the senate
for approval to borrow $800m from the World Bank.
Advertise on NigerianEye.com to reach thousands of our daily users
No comments
Post a Comment
Kindly drop a comment below.
(Comments are moderated. Clean comments will be approved immediately)
Advert Enquires - Reach out to us at NigerianEye@gmail.com