New borrowings for 2024 budget deficit, securitisation of N7.3trillionn ways and means advances triggers public debt to n121.67 trillion as well as Nigeria’s over-bloated public sector would continue to compel more domestic and external borrowings on account of the refusal of the federal government to plug other sources of leakages, analysts have warned....Read The Full Story Here ▶
They also warned that the current trajectory of fiscal policy is unsustainable, especially with the inefficient structure of the budget which prioritises recurrent spending over capital expenditure, due to the high debt burden and cost of governance.
In order prevent worsening the fiscal crisis, they called for the immediate implementation of prudent fiscal frameworks to curb wasteful expenditure, while the Federal Government should stem the tide of large-scale oil theft and dwindling production due to poor oil infrastructure, vandalism, and subdued oil investment inflows.
Mr Adewale Oyerinde, Director General of the Nigeria Employers’ Consultative Association (NECA), in a chat with Daily Independent, emphasised the need for institutional reforms that are necessary to ensure that the regulatory institutions have better disposition to support the growth of investment and focus more on the generation of revenue that would boost employment opportunities for the youths
“As of March 31, 2024, Nigeria’s total public debt has surged to N121.67 trillion (approximately $91.46 billion), marking a significant rise from N97.34 trillion (approximately $108.23 billion) on December 31, 2023.
“This represents a 24.99% increase, driven primarily by naira devaluation, although the debt decreased by $16.77 billion or 18.34% in dollar terms”, he said.
The NECA’S Director General, noted that debt includes both domestic and external obligations of the Federal Government of Nigeria, thirty-six state governments, and the Federal Capital Territory.
“Domestic debt constitutes 53.96% of the total, amounting to N65.65 trillion (approximately $46.29 billion), while external debt stands at N56.02 trillion (approximately $42.12 billion). Excluding naira exchange rate movements, domestic debt increased by N6.53 trillion or 11.05% from December 2023 to March 2024.
“This rise is attributed to new borrowings for the 2024 budget deficit and the securitization of a portion of the N7.3 trillion Ways and Means Advances at the Central Bank of Nigeria”, he said.
According to Oyerinde, “Given downside risks of inefficiency of most government revenue generating agencies, tough business environment, and uncertainty on global demand and price of crude oil, implored the government to strengthen strategies to attract private sector capital to compliment government financing of infrastructure”.
Dr Muda Yusuf, CEO Centre for the Promotion Of Private Enterprise (CPPE),in a chat with Daily Independent on the nation’s soaring debt stock , advocated the need for improvement in the provision and maintenance of infrastructure, investment productivity, and boosting of local business activities to support export activities and strengthen channels for dollar inflow.
He said: “There is a need to reduce the level of debt financing, especially the reliance on commercial debt to fund government operations as public debt is already at an unsustainable threshold.
“Steps should be taken to attract foreign exchange through a strategy of ensuring new investment opportunities to stimulate foreign capital inflows into the economy.
“We should be seeking more equity capital than debt capital”.
An executive director of a new generation bank in Nigeria, who craves anonymity, told Daily Independent that improving debt transparency management will be vital to help the Nigeria recover from fiscal challenges.
“With debt burdens at record highs in Nigeria, the lack of debt transparency could endanger the economic recovery in both short and in the long run”.
The Executive Director of the Civil Society Legislative Advocacy Centre (CISLAC), Auwal Musa Rafsanjani, told Daily Independent that the executive and legislative arms of government should explore alternative sources of funding to reduce borrowing.
He said: “Federal Government should develop a sound public debt management legal framework to establish clear debt authorisation provisions that would require the disclosure of public debt information as well as regulating its content and frequency and making it easily accessible to all Nigerians”
