AT least a significant voice of concern, from the Federal Legislature, is coming up against Nigeria’s rising debt profile. Probably the matter is now coming to a head.
On Wednesday, March 13, 2019 when the Senate returned from the political field to confront this year’s budget, some senators began a formal protest on the floor of the Senate Chambers over the rising debt profile as contained in the 2019 Appropriation Bill.
The Debt Management Office, DMO, had back in September 2018 indicated on its website that Nigeria’s total domestic and foreign debt stood at N22.428trn.
The senators said the increasing debt profile, if not checked, would put the nation’s generations unborn in very great danger. According to them, if caution was not taken, it would return the country to a highly indebted one as was the situation prior to the 2005 debt relief granted it by the Paris Club.
The Olusegun Obasanjo regime had to cough out $12 billion from our oil surpluses to secure an $18 billion debt relief to exit the $30 billion Paris Club debt trap.
Senate Deputy President, Senator Ike Ekweremadu, who first raised the alarm on the increasing debt profile of the country, said that though the budget proposals have to be given expeditious consideration and passage in view of enormous time already lost, its borrowing plans must still be scrutinised.
The Executive arm of the government has always argued that Nigeria still has enough head-room for more borrowing on the basis of its debt-to-GDP ratio.
Of course, the government is right on these statistics, but what they have not told Nigerians is where the debt profile stands when measured against debt servicing-to-revenue ratio. This ratio, at about 70 per cent as at last year, is one of the worst in the world.
Though time is already running out with regard to the consideration and passage of the 2019 budget estimates, the increasing borrowing as contained in the budget proposals may compel a delay in order to get the fiscal outlook in decent trajectory.
We agree that government needs to address our infrastructural needs through appropriate financing which the borrowings facilitate. However, we also agree with the Senate that there are other creative ways of funding infrastructure other than borrowing.
The Buhari government needs to seriously work on the public-private partnership infrastructure development model. It should also revisit and strengthen the concessioning option, ensuring that we guarantee confidence by respecting all memorandums of understanding once signed with development partners.
With debt profile rising by over 300 per cent in just four years (the 2019 borrowing plans inclusive) one needs no soothsayer to imagine that the future of the economy already over-burdened by huge debt is in jeopardy.