Heavy debt burden: Accumulated misapplication threatening Nigeria’s economy
Reservations over Nigeria’s debt profile have been with gripping concerns. The worries have been centred on the prospect of the Country amidst rising debt and the burden of servicing same. The outcry of warnings over the huge debt have been carted largely along the justification for the borrowings. Warnings of the risk of the Country being held amidst another debt trap have been on resonating vibration.
However, the Government has remained on its ground that the Country’s debt-to-GDP ratio is still within permitted limit. While the argument of the Government cannot be annulled, just as the case of borrowing cannot be said to be bad on its facial expression as an economic instrument, however, underlining questions over concerns of factors that may make same borrowings become a threat to the economy are much in view.
The subject of the application of loans acquired by the Government has been much in view as a central concern in the borrowing resort of the Government. Also, the standing economic order for borrowing is majorly streamed on the standard of being channelled to capital projects capable of bearing returns to boost economic fortune, good not only for repayment, but largely, for long term benefits to the economy. However, questions regarding the application of the loans, to what projects were they been channelled to? The execution standard, the vitality, the lasting impacts/returns of the projects, the sustainability value of same over time, among others, are resounding questions that should be given profound thoughts. The poor management culture of governance cannot be said not to have rubbed off and have its impacts on the expenditure of loans and the projects for which they are meant to bring to bear. It is apparent deficiencies of same have left the shadows of discrepancies reflecting in the volume of borrowings and the impacts on the economy. The absence of tangible reflections of the borrowings over the years on the economy, practically are reflections of irreconcilable gaps of unsettled parameter. Hence, weighing the impacts of borrowings on the economy, pose more reflections of deficient gaps of irreconcilable disparities.
Recently, fears over the misapplication of loans have been on frontline in the discourse over the debt profile of the Country. The outcry has been over the danger of borrowing for recurrent expenditure, since the reflections of pressure on the government have been perceived to push it to temptations of borrowing to settle recurrent expenditure. The situation has been worsened by the concerns over recent attraction of larger sum of the Country’s revenue to servicing debt, even at a disturbing rate of over 90percent.
On Tuesday, 14th June, 2022, the Acting Accountant-General of the Federation (AcGF) Anamekwe Nwabuoku, disclosed that Nigeria is currently borrowing money to pay salaries. Nwabuoku, in Abuja, at a retreat organised by the office of the AcGF for members of the Technical Sub-committee on Cash Management (TSCM), lamented there was an increase in government expenditure, due to rising security challenges and the social needs of the citizenry.
“We have to borrow to augment payment of salaries and wages. This shows we are in very difficult times. Government income is highly challenged. Records available indicate that due to dwindling revenues, the treasury had to resort to other sources to augment the payment of Federal Government public servants. There is an increase in government expenditure due to increasing security challenges and social needs of the citizenry,” he was quoted.
It is apparent the Government is becoming to have its hand tied to resort to unwholesome decisions that are highly detrimental to the well-being and prospect of the economic. Borrowing to settle recurrent expenditure, as paying salary, is a miscarriage of principles which portends threats that may set the economy on a crashing note with the heavy burden of debt in the long run.
It has become thoughtfully demanding on the Government to set the frame of its management of the economy with deliberate efforts to revert the trend which may lead the economy into the ebb of decomposition. Reconfiguring the posture to fiscal discipline, economic diversification, export sector promotion and addressing plugging revenue leakages, to boost and preserve revenue inflow, have become necessary.
Recently, the submission of cutting down the cost of governance has been noised, yet without positive response from the Government. Sacrificing the benefits of such necessity for myopic considerations hold dangers for the economy. It is high time the Government commenced revolutionary moves to salvage the economy, against staying put to patterns which having failed in their relevance, have plunged the economy into crisis by the deficiencies of their frame to satisfy rising demands.
