SAN FRANCISCO, October 12, (THEWILL) – The Federal Government may have signed a never-ending pact with debt. The way the debt market has become not only attractive but the most beautiful bride of the present administration is just beyond the ordinary. And the warm embrace it has given the market, unashamedly, still amazes many Nigerians, despite all warnings against the dangerous romance.
The worry, as well, is the unrepentant knack for borrowing to even fund non-essential frivolities that could be done away with, at least, for the time being. And just as if under a spell of sorts, Nigeria is gradually being dragged into what might eventually become its nemesis. This is all in a bid to satisfy the extravagant lifestyles of the political class as well as the lack of vision and shortsightedness of those at the helm of affairs.
Last Thursday, President Muhammadu Buhari presented the 2021 budget proposals to the National Assembly for consideration and approval. He passionately pleaded for the understanding of the federal lawmakers in approving the document he christened “Budget of Economic Recovery and Resilience.”
A day before the budget presentation, the lawmakers had approved a separate plan to borrow N4.28 trn to support the 2021-2023 Medium Term Expenditure Framework and Fiscal Strategy Paper, based on an estimated deficit of N5.16 trn and total expenditure of N13.08 trn.
Unfortunately, there is no sign of any resilience in the N13.08 trn 2021 budget that intends to borrow over N4trn to finance a deficit of over N5trn. A budget designed to be serviced by debt cannot be said to be resilient, especially when it goes beyond the three per cent threshold allowed by the Fiscal Responsibility Act of 2007.
We want to believe that whosoever advised on tagging the 2021 budget as “Budget of Economic Recovery and Resilience” might just be playing to the gallery. This, to all extent and purposes, is just another attempt at taking propaganda, which, unfortunately, has become the weapon of deceit, too far.
Already, well-meaning Nigerians and economic experts are keenly taking a cursory look at the budget proposals, which, many, though, commended, for coming in early to meet up with the new December to January calendar for the national budget but punctured it, especially for the concentration on borrowing.
The Director-General of the Lagos Chamber of Commerce & Industry, Muda Yusuf, though lauded the early presentation of the budget and commended the emphasis on completion of ongoing projects.
He, however, faulted the revenue projections, saying they pose bigger deficits risks as he maintains that the projections are quite ambitious when compared to revenue accruable in the past few years.
“We have witnessed large negative variances in revenue targets over the last few years. This poses a risk of bigger deficits than projected. The ballooning recurrent expenditure and debt service is a case for concern.
“The combination of these two line items exceeds the total revenue expected. The implication is that the entire capital budget would be funded by borrowing. This, therefore, is a cause for concern,” Yusuf was quoted to have said in an interview with the national news agency.
With Nigeria’s debt, both domestic and foreign, standing at N31.01 trn as at June 2020, according to the Nigeria public debt report released recently by the Debt Management Office, the country is surely going to sink deeper in debt with the new budget proposals.
The DMO report further indicates that N1.21 trn was spent on debt servicing alone in the first half of 2020 against N1.06 trn spent during same period in 2019 thus translating to an increase of 14.6 per cent.
The report also revealed that the country’s public debt jumped by a whopping $22.09bn in the last five years of the Buhari Administration. There is also no indication of putting a stop to accumulating more debts by an administration that seems to have entered into a secret covenant with debt.
It is indeed sad to note that despite all the official justifications of the borrowing spree, data from the Central Bank of Nigeria indicates that in the past five years, the Federal Government had spent a whopping N34.83 trn, with recurrent expenditure gulping 73.1 per cent, capital expenditure taking 19.2 per cent while 7.8 per cent was spent on transfers.
In essence, and quite revealing too, only about 19 per cent of the debts taken so far was spent on infrastructure, as the rest had gone for recurring expenditures such as salaries. With the notoriety for fiscal indiscipline and official corruption that have been witnessed in the past five years, there is no doubt that this trend would not continue.
THEWILL therefore calls for a total recalibration of the already submitted 2021 budget proposals even as we urge the National Assembly not to, as usual, pander to the whims and caprices of the President on this particular budget, which an opposition leader has already described as a “Budget of Catastrophe.”
Quite sadly and most unfortunately, however, the National Assembly, might even jerk up the figures to accommodate their own frivolous projects too, thus compounding the already high debt profile.
We strongly believe that debts which come with heavy servicing should not be used to fund non-essential projects at this point in time when revenues are really dwindling. A situation where the sum of N336 million is projected to tackle hate speech and fake news all in the guise of funding what the Federal Ministry of Information and Culture described as Special Enlightenment campaign on government policies and programmes is totally unacceptable.
THEWILL also calls for a reappraisal of the planned expenditure of a whopping N12.5bn on maintenance of the presidential fleet from N8.5bn in 2020. This and the N9.2bn approved for the renovation of the National Assembly as well as another N1.2bn 9n travels for the president are all expenditures that could be drastically pruned down in view of the glaring paucity of cash.
The combination of all these not-too-important projects undoubtedly adds to the country’s debt stock, which is gradually become embarrassing, hence the need to be more careful in going for more borrowings.