Contrary to the stand of the federal government that the nation only has revenue challenge and not debt problem, economists and experts have said that the country has a huge debt burden.
Zainab Ahmed, the minister of finance, budget and national planning, had at a meeting with the members of staff of the ministry on Monday said that Nigeria did not have any debt challenge but a challenge with generating sufficient revenue.
The minister decried what she described as ‘insensitivity’ concerning the debt situation in the country, preferring that attention should rather be focused on revenue generation rather than debt.
However, in separate interviews on Thursday, experts, including Sheriffdeen Tella, a professor of economics at the Olabisi Onabanjo University Ago-Iwoye, Ogun State, and Bismarck Rewane, the managing director and chief executive officer, Financial Derivatives Company Limited, said that there was the need to be concerned about the nation’s debt situation.
We shouldn’t accumulate more debt, says Tella
Tella, who insisted that the country had a debt problem, said with the federal government spending about 20 per cent of its budget size to service debt, it was practically impossible for Nigeria not to be having a debt problem.
He called on the government to discontinue borrowing in order to avoid a situation where a huge chunk of the country’s annual budget was spent on debt servicing.
Tella said, “We have a debt problem because when you have problem with debt servicing, then you have a serious debt problem.
“Currently, what we are still doing is debt servicing using a huge proportion of the annual budget to pay debt. That is serious because the money that you would have used for other things is now being used to pay debt.
“So, we have problem with debt really. The debt is still mounting and the servicing that we are doing is quite huge. We are using over 20 percent of our budget to service debt.
“I don’t know what they meant by saying we have no problem with our debt. We have a very serious problem with debt. We should not even accumulate further debt beyond what we currently owe.”
Also speaking, a former director general, Abuja Chamber of Commerce and Industry, Chijiok Ekechukwu, said the rising debt portended danger for the economy.
He said, “It is expected that the debt profile of the country would rise considering the fact that we have a deficit budget and even the deficit side of the budget was not met in the last budget year.
“The government would need to continue to borrow to meet the increased size of the deficit.
“Of course, the borrowing portends danger for the economy because our debt profile is rising and we do not know when we are going to scale it down.”
He said rather than continue to rely on borrowing to finance its activities, the Federal Government should adopt other sources of funding the infrastructure needs of the country such as concessioning, privatisation, and Public Private Partnership arrangement.
Don’t borrow for consumption, borrow to invest –Rewane
Rewane, on the other hand, said what the debts were used for would determine whether they would help or hurt the nation’s economy.
He said, “If the debts are there, and you have roads, rail tracks and power stations; then there is no problem because the power generated, for example, will give you output that you will use to service the debt. The question we need to ask is: what were the debts used to do and are the debts increasing productivity in the country?