Nigeria’s rising debt profile bad for economy, say senators - PUNCH
BY Sunday Aborisade, Abuja
Members of the Senate on Wednesday started discussions on the general principles of the 2019 budget, describing the nation’s rising debt profile as alarming and unhealthy for the economy.
The Debt Management Office, in its official website published that the nation’s foreign and domestic debt stock as of September 30 2018, stood at N22.428trn.
The proposed budget of N8.83trn which was presented by President Muhammadu Buhari on December 19, 2018, is based on oil price benchmark of $60 and production estimate of 2.3 million barrels per day.
Most of the senators described the projections as unrealistic, considering the volatility of the international oil market and uncertainties in daily production outputs.
They expressed concerns over government’s borrowing plans to fund the N1.86trn budget deficit, which constitutes 1.3 per cent of the nation’s Gross Domestic Product.
The senators also picked holes in allocations to various sectors and alleged that the proposed fiscal document was not designed to grow the economy through job creation and empowerment.
The Senate Leader, Ahmad Lawan, in his lead debate, gave a summary of the proposed budget and noted that it was also designed to fund projects that would be carried over from the 2018 budget.
He also explained that the N500bn in the 2018 budget which was also retained in the current proposal, for the social intervention fund, would alleviate sufferings.
The Deputy Senate President, Ike Ekweremadu, noted that borrowing was becoming increasingly unsustainable and urged the nation’s leaders to caution themselves before they mortgage the future of their children.
He said, “Some countries are already in danger including Indonesia because of the borrowing they had in the past. For every money we borrow, there must be a day for payment.
“We must therefore be cautious. Yes, it is important that we address our infrastructural needs through appropriate financing but I believe there are other creative ways of funding infrastructure, including Public Private Partnership and concessioning.
“It is time for us to ensure that our debt to GDP ratio must not exceed an acceptable level.”
The member representing Kogi West, Senator Dino Melaye, also decried the debt profile of the country, stressing that the nation had borrowed over $40bn in the last four years to stabilise the naira.
He said, “Nigerian government and the parliament should be sorry about the 2019 budget. The Federal Government has spent $41bn to cushion, maintain and stabilise the naira. We no longer have enough foreign reserve to continue to cushion the effects of the devaluation of the naira.
“The price of crude has dropped to $50 from $60. This is very significant and has made the price of crude oil in the 2019 budget unrealistic and unrealisable. There is a drop in the internally generated revenue of the Federal Government.
“There is a drop in the revenue of the Nigeria Customs Service. Federal Government has no money again to subsidise fuel subsidy. In the midst of this entire calamitous situation, how do we fund the 2019 budget?
“Are we going to fund it based on daily contributions? Are we going to borrow again? These are questions begging for answers. I want to announce to Nigerians that the Federal Government will soon deregulate.
“Inflation is rising. Unemployment is on the increase, yet we have a budget that made no provision for the poor masses of this country.
“I challenge the proponent of the 2019 budget and those who support anything presented by the executive to tell me where in the 2019 budget that any provision has been made for the poor, and the unemployed.
“There is no longer foreign investment in Nigeria. With all these indices and yardsticks, by the end of May, except there is a miracle, a dollar will rise to N500.
“Our foreign reserve has been depleted. We are a borrowing nation. Upon the announcement of Muhammadu Buhari as the winner of the election, the stock market has lost over N300bn.
“There will be devaluation of the naira. We cannot as a nation be borrowing again to fund the 2019 budget. Our external debt as we speak today stands at $23bn, which is the highest in the history of the Federal Republic of Nigeria, not even under the military government did we have this type of borrowing.
“Our local debt today is over $20bn, hence the nation owes over $40bn with the 60 per cent incurred under the Buhari administration.
“Already, there is a plan by the executive to write the senate to demand approval for another $12bn to service the Port Harcourt-Maiduguri rail project. This will take our borrowings to over $60bn”
The Chairman, Senate Committee on Local and Foreign Debts, Senator Shehu Sani, described the nation’s debt profile as alarming.
He stressed the need for proper audit of funds allocated to the military and the social investment programme of the Federal Government.
He said, “Funding for the military should be well audited and targeted specifically on areas of need. The budgetary allocation to education is grossly inadequate for the sector.
“Social investment fund should be properly audited. There should be deliberate and realistic means of empowering the youths and creating employment. There is a need to withdraw the military from civil service to enable them to concentrate on the protection of the nation’s territorial integrity.”
Senator Fatimah Raji-Rasaki, in her contribution, urged the senate leadership to invite the Minister of Information, Culture and Tourism to explain what he has been doing in the areas of tourism despite the huge amount allocated to the ministry.
Senator Andrew Uchendu (PDP-Rivers) said the benchmarks of 60 dollars/barrel and daily production output of 2.3 million barrels/day were unrealistic and called for a reduction of the figures.
He said, “The 60 dollars/barrel benchmark seems unrealisable because the international price as we speak, is around 50 dollars per barrel.
“Again, our budgets have always been based on 2.3 million barrels per day, but this has not been realised over the years.
“It will make more sense to reduce the figures so that we give a more realistic projections,” Uchendu said.
However, the Deputy Senate Leader, Bala Ibn Na’Allah (APC-Kebbi), allayed the fears on borrowing, noting that the country’s debt-GDP ratio was still very low, as already acknowledged by experts.
Na’Allah, however, said the budget should be adjusted to give adequate attention to even distribution of wealth among Nigerians which he said was one aspect the National Assembly should look at.
All the senators called for the speedy consideration and early passage of the bill to pave way for improved budget performance.