Nigeria can’t continue in path of rising debts – Experts counter Tinubu

Economic experts have said Nigeria cannot continue on the path of indebtedness amid incompetence and inefficiency.

The economic analysts were reacting to the All Progressives Party, APC, presidential candidate Bola Ahmed Tinubu’s recent comment on Nigeria’s 2023 appropriation bill.

Recall that Tinubu remarked in his interaction with business stakeholders in Lagos that budget deficits are not necessarily bad.

However, Nigeria’s rising debt profile has been a source of apprehension for many economists and ordinary Nigerians.

Indeed, for a country struggling on all fronts, an N77 trillion debt if the National Assembly approves President Muhammadu Buhari’s 23.7 trillion Ways and Means advance, according to the Debt Management Office, DMO’s recent statement, should raise dust.

With the country’s dwindling revenue portfolio and overbearing debt repayment burden, the fear continues to escalate.

In perspective, a breakdown of this year’s appropriation bill with N21.51 trillion expenditures and expected revenue of N9.73 trillion, shows that a whooping N6.31 trillion representing over 70 per cent of its aggregated revenue would be gulped by debt servicing and shooting up the country’s budget deficit to N10.78 trillion.

In plain economics, Nigeria’s debt situation does not look good.

Reacting to the development in a chat with DAILY POST, a financial inclusion/wealth management expert, Mr Idakolo Gbolade, said budget deficit financing could not translate to economic growth in Nigeria.

He stated that the budget deficit is causing Nigeria to double-digit inflation and depreciation of the Naira.

He added that historically, the budget deficit has not been productive because some of the projects financed by it are not economically viable. He cited Nigeria’s railway, currently crippled by insecurity, as an example.

“Budget deficit financing cannot translate to economic growth in Nigeria because deficit financing has led to double-digit inflation with the country also battling chronic food inflation.

“The deficit financing has consistently weakened the Naira and has led rating agencies to downgrade Nigeria’s credit rating, thereby affecting the flow of investment opportunities and the ability of the private sector to source funding from foreign institutions.

“The deficit spending by Nigeria cannot be said to be productive because some of the infrastructural projects financed by the government are not commercially viable projects that can repay the loans used to fund them.

“A significant example is the railways which have been rendered unproductive by insecurity that has affected their operations.

“Continuous deficit spending by the government would leave the government unable to undertake key social and infrastructural projects in the long run”.

Also, an Accounting and Financial Development don at Lead City University, Ibadan, Prof Godwin Oyedokun, said Nigeria is having budget deficits owing to inefficiency and incompetence.

He said it was not good for a country to use a larger part of its income (revenue) on debt serving, as Nigeria did.

Also, he disclosed that the country’s budget deficit on recurrent expenditure would only plunge her unborn generation into a debt trap.

He said the budget deficit becomes laudable if it is meant to finance capital expenditures.

“Yes, the budget deficit is not bad at all. My stand has always remained that the country shouldn’t use a larger part of its income to pay a debt; that is where the problem comes in. Another problem is how sincere are the government deficits in terms of budget. We have a deficit where recurrent expenditure is not lower than capital expenditures. It means we are going into debt to make a certain class of Nigerians wealthy. It won’t be an issue if most people in the economy are productive. You pay a salary for a job for twenty people instead of two people.

“We have deficits in inefficiency and incompetence. Such will not develop the economy. If the budget deficit is on capital expenditures, this will bring about future cash flow into the economy. If the Central Bank of Nigeria’s 23 trillion ways and means is added, Nigeria’s debt profile will hit N77 trillion. It means that generations yet unborn will be using their income to pay the debt of their fathers who decided not to take governance seriously,” he lamented.

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