PRESS STATEMENT NECA raises concern as Nigeria’s debt profile hits N15.814trillion in third quarter
January 14, 2019
FOLLOWING the third quarter report of the Debt Management Office (DMO) and the 2019 budget assumptions, the Nigeria Employers’ Consultative Association (NECA) has expressed fears at the country’s mounting debt burdens moving up to N15.814trillion in September, 2018 from N15.629trillion in June, 2018.
Speaking in Lagos, the Director-General of NECA, Mr. Timothy Olawale, stated that the figures released by the DMO showed that the Federal Government’s domestic debt profile rose 1.19 per cent in the third quarter.
According to him, the worrisome figures comprising the external and domestic debt of the government, the 36 states and the Federal Capital Territory (FCT) hitting the $73.208billion (N22.38 trillion) recorded in June, 2018.
Olawale said that this trend, which he insisted was disturbing, could have a negative effect on the developmental capacity of Nigeria despite government’s financial managers’ argument that the rate of increase was within a manageable limit.
He noted that financial experts at the International Monetary Fund (IMF) and the World Bank had in fact, advised that the revenue-to-debt ratio was unsustainable and it portended a serious danger for the future generation.
He added: “While the effect of the increasing debt may not be immediate in totality, it could be catastrophic in the long-term with a chunk of revenue consumed by debt servicing to the detriment of infrastructural development.
“This, sadly, is the current reality as N2.140 trillion from the N8.8 trillion proposed 2019 budget, has been earmarked for debt servicing, representing about 25 per cent of the total budget allocation.
“The size of government borrowing in the domestic financial market also continues to be a major source of concern as this has in no small measure, affected the chances of the real sector to access funding at a reasonable cost.”
He advised the government; federal and state to as a matter of urgency, take deliberate steps aimed at cutting the cost of governance and recurrent expenditure.
Government, he emphasised also needed to start paying serious attention to workable investment schemes, collaborating strongly with the private sector, which he said was the engine room for economic growth.