The Director General of the Budget Office of the Federation, Mr Ben Akabueze, has issued a warning that Nigeria is rapidly approaching its borrowing limit.
POLITICS NIGERIA reports that Akabueze expressed concerns over Nigeria’s borrowing practices while speaking at the International Conference Centre in Abuja during the induction of newly-elected lawmakers of the 10th National Assembly on Wednesday.
He said: “While the size of the FG budget for 2023 created some excitement, the aggregate budgets of all governments in the country amount to about 30 trillion Naira. That is less than 15 percent in terms of ratio to GDP.
“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 a 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”.
This follows President Muhammadu Buhari’s recent request for the Senate to approve a new loan of $800 million, which would be used to expand the National Social Safety Net Programme.
In a letter read by Senate President Ahmad Lawan during plenary on Wednesday, Buhari stated that the loan would be sourced from the World Bank and would extend the unconditional cash transfer programme currently implemented by the Federal Government.
Buhari’s borrowing practices have come under scrutiny in recent years, with many questioning the sustainability of Nigeria’s increasing debt.
This latest loan request comes just days before the end of his tenure in office.
