Dr Tunde Adeoye, a Senior Lecturer, Department of Economics, University of Lagos, has advised the Federal Government to reduce its annual budget in order to stem mounting debt profile in the country.
Adeoye, an Associate Professor, gave the advice in an interview on Wednesday, in Ota, Ogun.
The economists spoke while reacting to the federal government proposed plan of seeking Senate approval to borrow 4.1 billion dollars and 710 Euros.
President Muhammadu Buhari on Tuesday in Abuja wrote to the Senate for approval to borrow the amounts.
He stressed the need for federal government to reduce its expenditures so as to stem the debt burden that kept mounting as a result of continuous borrowing.
“Why must we embark on budget that is more than our revenue? If we know that our internally generated revenue annually is N5 trillion, let’s cut our budget to N5 trillion,” he said.
The economist noted that if the federal government borrowed additional money, the implication is that debt servicing would increase and others things like infrastructure would be lagging behind.
Adeoye said that more than 80 per cent of annual revenue was used in servicing debt, adding that this is not good enough for a nation working toward sustainable economic growth.
“Cutting our expenditures according to our revenue is necessary as servicing of debt has taken away almost all our annual revenue.
“And we keep increasing debt, who is going to repay the debt, is it the unborn generation?” the don asked.
He urged the federal government to look inward by reducing its budget rather than continued borrowing.
Also speaking, Prof. Evans Osabuohien, Senior Lecturer, Department of Economics, Covenant University, Ota, said that taking more loans would increase the debt profile as one quarter of nation’s revenue was used to service debt.
Osabuohien said that going to borrow more money is like entering into more debt trap and trouble.
However, he said, “There is nothing bad in borrowing if only the money is used for production purpose and building capital projects.”
The economist also advised the federal government to utilise what the country generates than going to borrow more funds.
Osabuohien stressed the need for government to sell assets that were not yielding returns and use the money for intended projects.
“Let’s look at the nation’s assets how productive they are, if they are not productive, dispose the assets and use it for the capital projects,” he urged.