The growth in the level of debt is something of concern because the debts are liabilities. You also have to focus on the assets. What are the assets that are being acquired? How much of it is for consumption and how much of it is for Gross Capital Formation.
The concerns are natural concerns and everybody will be concerned because the fact that you are borrowing does not mean the project will be complete, or it does not mean the project will have the desired impact.
The public outcry against President Mohammadu Buhari’s request for $4.179 billion additional borrowing intensified yesterday with another member of the Presidential Economic Advisory Council (PEAC), Mr. Bismarck Rewane, supporting the position of the Council’s Chairman, Professor Doyin Salami, stressing that every Nigerian should be concerned about the nation’s huge profile, which increased further by N2.36 trillion or 7.13 percent to N35.47 trillion in the second quarter of the year (Q2’21).
Salami, in a presentation titled, “The State of the Economy,” expressed concern about the nation’s debt profile. He stated that the country’ N35.47 trillion public debt was unsustainable even though the country’s debt-to-Gross Domestic Product (GDP) ratio at 35 per cent seems comfortable.
Supporting Salami’s position, Bismarck Rewane, who is also the Chief Executive Officer, CEO, Financial Derivatives Company (FDC) in an exclusive interview with Saturday Vanguard, averred that every Nigerian should be concerned because the FG is taking a risk with the borrowing.
Furthermore, Rewane cautioned against reckless borrowing, stressing that continuous borrowing if not complemented with increase in government revenue, will push the country towards a ‘fiscal Cliff’.
Consequently, he recommended that the FG should adopt the model of project-specific borrowing, which can have a measurable and objective impact on the economy, as against the current practice of borrowing to fund anything.
