Market News

By Joseph Chibueze, Abuja

The proposed borrowing of about N9.3 trillion discretionary loans to partly finance the N13.4 trillion deficit in the proposed 2025 budget can worsen Nigeria’s debt problem, says Professor Uche Uwaleke, Director of the Institute of Capital Market Studies at the Nasarawa State University.

Other sources of funding for the deficit, according to the proposed budget, are asset sale/privatisation, which will contribute N312 billion, and multilateral/bilateral project-tied loans.

Nigeria had a debt burden of N134.3 trillion ($91.3 billion) as at the end of the second quarter of 2024.

The professor said efforts should be made to ensure that all long-term funds sourced from the debt capital market are tied to self-liquidating projects.

Uwaleke, who raised a few concerns on the proposed 2025 budget, urged the National Assembly to carefully scrutinise the document.

He said a thorough review of the line items that make up service-wide votes and capital supplementation can free up significant funds that can be channelled to other critical areas such as agriculture and solid mineral development.

“For instance, the National Assembly should interrogate the composition and rationale for the margin for increase in costs and recurrent adjustment (N12 billion) as well as the line item tagged contingency recurrent,” he noted, adding that “the same figures appeared under service wide votes in 2024. Equally, under capital supplementation is a line item known as ‘contingency capital (N200 billion) which also featured in the 2024 budget for the same amount”.

“The opaque description of these items as well as their presentation calls for closer scrutiny”, he said.

He wondered why projects are merely listed as ‘ongoing’ without stating the completion target expected in 2025.

He identified 10 projects listed under the Ministry of Transport as ‘ongoing’ for which N42 billion is earmarked.

These include the completion of the Abuja-Kaduna railway project, Lagos-Ibadan and its associated additional works, rehabilitation of the Itakpe-Ajaokuta rail line and ‘construction of 12 number of station buildings and track laying works at railway ancillary facilities areas Agbor.

Others include the installation of a signal and telecommunication system on the Itakpe-Ajaokuta-Warri railway line, the installation of a coastal sensing security surveillance system for the Abuja (Idu)-Kaduna and other security gadgets, as well as completion of feasibility studies for new standard gauge rail lines.

“To see the shortcomings in this presentation, most of these projects also featured in the 2024 budget breakdown where a provision of N33 billion was made,” he said.

“Even the ‘feasibility studies for new standard gauge rail lines listed as completed in the 2024 budget also appear to be completed in the 2025 budget.

“Besides, the document was silent on the completion stages of these projects and did not indicate how much each of these projects would cost. This sort of narrative does not allow for a correct assessment of progress made in the projects’ execution.”

“It stands to reason that long-term projects such as roads or railways spanning several years should first be included in a country’s perspective plan (or at least medium-term plan) indicating timelines and then each year, the annual budget draws from it showing (preferably in kilometres as opposed to ‘sections’) achievable targets. This renders the use of ‘ongoing’ a poor indicator to have in an annual budget,” he said.