- The Federal Government intends to borrow N12 trillion more, bringing the total public debt to N50 trillion by 2023…
The government’s borrowing strategy relies on domestic bonds and low-interest external loans.
By 2023, the Federal Government wants to bring its total public debt to N50.22 trillion, with domestic debt at N28.75 trillion and external debt at N21.47 trillion.
According to the National Development Plan 2021-2025, this is the case.
Nigeria’s public debt reached N38 trillion at the end of the third quarter of 2021, according to the Debt Management Office, with the entire debt stock increasing by N2.540 trillion in three months from July to September 2021.
This indicates that the President’s regime, led by Major General Muhammadu Buhari (retd. ), intends to amass nearly N12 trillion in debt during the next two years, from 2021 to 2023.
- The government, on the other hand, plans to reduce total public debt by 2025, according to the plan.
The government plans to have a debt stock of N39.59 trillion in 2021, N46.63 trillion in 2022, N50.22 trillion in 2023, N50.53 trillion in 2024, and N45.96 trillion in 2025, according to a table in the document.
The government also admits that it need funds to fund the N348.1 trillion plan, with a 45 percent borrowing framework in place for both international and domestic borrowing.
“The plan will require an investment of about N348.1tn to achieve the plan objectives within the period of 2021-2025,” according to the plan. The government’s capital expenditure is expected to be N49.7 trillion (14%) during the period, with the private sector bearing the remaining N298.3 trillion (86%). FGN capital spending will be N29.6tn (9%) of the 14 percent government contribution, while sub-national governments’ capital
“The plan’s borrowing framework calls for 45 percent each for international and domestic borrowing, with the remaining 10% coming from other sources. The plan’s borrowing techniques will include domestic bonds and concessional external loan funding, among other things. As a result, the government’s present debt management policies will be improved in order to assure long-term viability.”
- According to the expert, assets must be generated to justify debt, and infrastructure is critical.
Although the debt servicing to revenue ratio will exceed even by 2022, according to an investment analyst, Omosuyi Temitope, the government appeared to be borrowing for obvious reasons.
“Indeed, debt service to revenue would remain above 80% in 2022,” he said, “but there are obvious reasons why the government must embrace more borrowing.”
“First and foremost, no country can achieve long-term development without borrowing to fund growth-enabling investments and programs. Nigeria’s infrastructure requirements are critical for the country’s long-term, inclusive growth.
“Everyone can clearly deduce the negative impact of poor infrastructure on the nation’s growth, ranging from high costs of doing business to high costs of living in the midst of generally poor living conditions, to name a few.”
However, he emphasized the importance of making the debt sustainable by creating assets and value to justify the loan.
“Even at the current level, it is concerning,” he continued, “let alone planning to borrow more.” It is regrettable that the government is continuously considering borrowing rather than considering other revenue-generating options.
“They can ensure that public-private partnership projects are built, and that once operational and yielding capital, whoever implemented it can make money plus interest, and then the project becomes ours, and we can make money from it.” We can scale down initiatives until we have the cash to implement them, and we can also implement ventures that produce revenue on their own.
- Rather than borrowing, go after affluent Nigerians who owe the government – Economist
“Rather than always thinking of borrowing, the government can go after those who owe the country. For example, NEITI recently discovered some money held by some wealthy individuals, money worth trillions of dollars, but the government isn’t going after those funds.”
He went on to say that the government’s borrowing pace was unsustainable because revenue will be used to pay off debts.
“Also, our borrowing pace is not sustainable,” he added, “because almost all of the country’s revenue is used to pay the current debt, and as a result, the government does not have enough money to pay for a lot of its expenditure.”
- The rising debt profile raises concerns about the economy’s long-term viability – CPPE
Dr Muda Yusuf, an economist and the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, said the government’s growing debt profile created some sustainability issues.