The presidential candidate of the Peoples Democratic Party (PDP), Alhaji Atiku Abubakar has lamented Thursday’s admission by the Minister of Finance, Budget and National Planning, Hajia Zainab Ahmed that debt servicing by Nigeria now exceeds revenue figure. He then proffered four steps the government must take urgently to save the dire situation.
The Minister had disclosed that Nigeria’s fiscal position worsened in the first four months of 2022 as the cost of repaying debt surpassed the government’s revenue in the first quarter of the year. Fiscal performance report for January to April indicted that total revenue stood at N1.63 trillion, while debt servicing was N1.94 trillion, showing a variance of over N300 billion.
Ahmed then warned that urgent action was required to address the revenue challenge and expenditure efficiency at both the national and sub-national levels.
In a series of tweets on Saturday, Abubakar urged the government to “take immediate steps to slow down the rate of debt accumulation by promoting more Public Private Partnerships in critical infrastructure funding and identifying more innovative funding options”.
His other suggestions included “review the current utilisation of all borrowed funds and ensure that they are deployed more judiciously; specifically, government must ensure that all borrowed funds are for priority infrastructure projects that would generate income, boost output, and put the economy on the path of sustainable growth; and review the country’s debt strategy by focusing on concessional and semi-concessional sources with lower interest rates and relatively long-term maturity”.
The government, he said, “must reduce the issuance of short-dated debt instruments; and take steps to improve its spending efficiency and drastically cut unnecessary and wasteful expenditures”.
The candidate of the main opposition party had earlier described Ahmed’s revelation as “very worrisome”.
“First, this action must be in breach of all known reasonable debt-sustainability thresholds. Second, it puts a big question mark on the capacity of the government to manage its rising debt profile without endangering macroeconomic stability”, Abubakar wrote.
“Indeed, I am concerned that this action is already exposing Nigeria to financial stability issues as we slip from a medium risk of debt distress to high risk of debt distress.
“I had on several occasions warned that not only is the fiscal cost of government’s indiscriminate borrowing so enormous but has even greater opportunity costs as we sacrifice investments in critical areas, including education, health, and other basic services.
“This is certainly detrimental to Nigeria’s long-term growth,” he further said.