Our land soaked in blood, gloom, South-East Bishops wail

By Peter Egwuatu

Agusto & Co, a foremost credit rating agency in Nigeria, has projected that the country’s debt-to-revenue ratio will cross 80 per cent mark in 2022 following the build up to the general election in 2023.

In their projections for 2022, the agency stated that in 2022, the major themes that will dominate Nigeria’s economic landscape will be politics, the management of the fiscal deficit, foreign exchange policy of the Central Bank and changes in prices and economic growth (or the lack of it).

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According to them, “Of all these factors, politics will dominate the landscape due to the general elections in 2023. ”Nevertheless, the dominance of politics in 2022 will not diminish the importance of the other major economic themes. ”Nigeria’s failure to pursue macro-economic reforms over the last eight years has placed the country at a back foot and in 2022 we expect that this reform inertia will persist even till the expiration of the current administration. This could effectively be the legacy of the current administration.”

It further explained that other socio-political factors that will shape the economic landscape in 2022 come in the form of headwinds, “The crisis of insecurity characterised by kidnapping and armed banditry across flashpoints in the north and parts of the south will be the most dominant of these socio-political factors. Another social factor to watch out for will be the management of risks around COVID-19.

”Overall, all of these factors will have a telling effect on industries in 2022. Thus, the success of industries in 2022 will largely be defined by the level of resilience within the industry” it noted.    

In its reactions to the management of the fiscal deficit in the country, the agency stated: “In 2022, we estimate that the debt to revenue ratio will cross the 80% mark and hover between 85% – 90% as election induced spending ramps up. ”While we do recognise the initiatives to grow fiscal revenues, Agusto & Co is of the opinion that these efforts will not be enough without due consideration to the expenditure element of the fiscal balance equation. Plans to more than double the non-debt recurrent expenditure to aboutN6.9 trillion in 2022 from about N3.5 trillion last year, indicates an absence of fiscal discipline to rein spending largely financed by borrowings.

“We also believe that this administration will not pursue other deficit financing options – particularly disposal of assets – in 2022. In 2021, the federal government estimated revenue projections from privatisation at N205 billion but ended the year without any proceeds from divestments of state- owned enterprises. ”In 2022, the Federal Government has budgeted N90billion from the same source. We believe this will also not materialise.”

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