Nigeria fast exceeding its borrowing limit, budget office raises alarm
The Director General, Budget Office of the Federation, Mr Ben Akabueze has raised the alarm on Nigeria’s borrowing spree , noting that the country is fast exceeding its limited borrowing space.
Akabueze spoke Wednesday at the induction of newly elected lawmakers of the 10th National Assembly, at the International Conference Centre (ICC) Abuja.
His concerns and fear came at a time President Muhammadu Buhari forwarded a fresh loan request of $800 million to the National Assembly to service the needs of vulnerable 10.2million households at N5, 000 each.
The president said the loan, as part of the administration’s social intervention programme, would stimulate activities in the informal sector; improve nutrition, health, education and human capital development of beneficiary households.
Speaking at the induction of the lawmakers-elect, Mr. Akabueze said the country had one of the lowest Gross Domestic Product (GDP) to debt ratio in the world.
He said: “While the size of the FG budget for 2023 created some excitement, the aggregate budgets of all governments in the country amount to about 30 trillion Naira. That is less than 15 percent in terms of ratio to GDP.
“Even on the African continent, the ratio of spending is about 20 percent. South Africa is about 30 percent, Morocco is about 40 percent and at 15 percent, that is too small for our needs.
“That is why there is a fierce competition for the limited resources. That can determine how much we can relatively borrow. We now have very limited borrowing space, not because our debt to GDP is high, but because our revenue is too small to sustain the size of our debt. That explains our high debt service ratio.
“Once a country’s debt service ratio exceeds 30 percent, that country is in trouble and we are pushing towards 100 percent and that tells you how much trouble we are in. We have limited space to borrow.
“When you take how much you can generate in terms of revenue and what you can reasonably borrow, that establishes the size of the budget. The next thing would be to pay attention to government priority regarding what project gets what.
“The budget is not a shopping list. In the end, the budget only contained expenditure”.
Akabueze also berated the nation’s budgeting system, saying Nigeria has no organic budget law,saying :
“The Federal Government of Nigeria does not have an organic budget law. It is really unfortunate that we don’t have an organic budget law. Hopefully, there is one in the work in the 9th Assembly and may be passed before the Assembly winds up.
“I don’t know any serious country in the world that does not have an organic budget law. Each country has to determine its budget system that works for it. Budget is multi-dimensional in coverage. One, it is political because it allocates scarce resources of the country among multiple competing and sometimes, conflicting, interests.
“It is also an economic document because it helps as the primary fiscal instrument for stimulating economic growth, ensuring employment and maintaining economic stability. It is an accounting document and provides a ceiling and is legally binding for the government to operate. It is also a moral document. You can know what a country cherishes by looking at its budget document.”
