…Says over N3 trillion for debt services massive
By Chris Ochayi – Abuja
The Coalition of United Political Parties, CUPP, has said the idea of new borrowing of over N4 trillion to finance a deficit in 2021 budget was worrisome.
National Secretary of CUPP, High Chief Peter Ameh, who made the remarks, while reacting to 2021 budget proposal presented to the National Assembly by President Muhammadu Buhari, also expressed apprehension that over N3 trillion was allocated to debt serving alone.
Ameh said, “The capital allocation to education and health sectors are more than that of defence which is an indication of a departure from the stick approach to carrot approach.”
According to him, “I must sincerely commend Mr President for the early submission of the 2021 budget proposal, and its prompt consideration and passage by the National Assembly will be highly appreciated by the Nigerian people.
“The submission of the budget proposal to the National Assembly in good time will definitely allow the National Assembly sufficient period of time to consider the budget and also give the ministries, agencies, and parastatals to defend their budget proposals.
“The budget parameters and assumptions are realistic except the exchange rate of NGN379 to USD. The exchange rate is unrealistic due to differing exchange rate windows being operated by the Central Bank of Nigeria which distorts projections by the private sector which usually requires forex for their day to day operations.
“On the aspect of Gross Domestic Product which is GDP growth rate projected at 3% is a little ambitious in view of the impact of the COVID- 19 on the economy expected to linger beyond next year.
“At the cost of the recent speech report on Nigeria project which is the GPD cost rate of 1.3 % for the country in 2021, the budget proposal for the fiscal year 2021 seems to have set the right priority with the bulk of capital spending going to ministry of work and housing, power and transportation for the first time in over 16 years.
“Finally the idea of new borrowing of over N4 trillion to finance a deficit budget is worrisome by allocating over three trillion to debt servicing alone, this call for serious thought.
“The N13.08 trillion estimated budget is a huge amount of money to make an impact but the high cost of servicing debt which is above N3 trillion is very massive, and may act as a drag on the economy.
“All the budget assumptions look fairly realistic if monetary and the fiscal authorities will match their words with the real action by complementing and harmonizing each other with a good policy framework to drive the economy forward.”