The Director-General, Budget Office of the Federation, Ben Akabueze, on Wednesday, raised the alarm that Nigeria was fast exceeding its limited borrowing space.
Akabueze who spoke at the induction of newly-elected lawmakers of the 10th National Assembly at the International Conference Centre in Abuja, said the nation’s debt profile was becoming unsustainable.
He said, “We now have very limited borrowing space, not because our debt to Gross Domestic Product (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 per cent, 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.
“You may have heard that we have one of the lowest GDP to debt ratios in the world. While the size of the federal government’s budget for 2023 created some excitement, the aggregate budget of all governments in the country amounted to about N30 trillion.
“That is less than 15 per cent in terms of ratio to GDP. Even on the African continent, the ratio of spending is about 20 per cent.”
The former Lagos State Commissioner, pointed out that in South Africa, “it 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.”
Akabueze noted that for Nigeria to be able to fix the infrastructural needs of the country, “we need to be spending about $100 billion annually as a country, including private spending on infrastructure.”
He noted that, “the aggregate budget of the federal government is only about $30 billion and the aggregate of the states and FCT budget don’t even add up to the federal budget.
“This means that even if we spend everything, we will still be left with a huge infrastructural deficit.”
Sunday Aborisade and Udora Orizu
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