The presidential candidate of the Peoples Democratic Party for the 2023 elections, Alhaji Atiku Abubakar, has reacted to the revelation by the Federal Government that the cost of serving Nigeria’s debt has surpassed its retained revenue by N310 billion in the first quarter of the year.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, disclosed this on Thursday when she spoke in Abuja.
Ahmed spoke at the unveiling of the Medium Expenditure and Fiscal Strategy Paper.
She revealed that the country’s debt service cost in First Quarter 2022 was N1.94 trillion, N310 billion higher than the actual revenue received during the period.
When debt service cost outstrips the country’s revenue, it is a clear indication of dangers ahead.
Reacting to the development in a statement he personally signed, Abubakar, a former Vice President of Nigeria, said: “Thursday’s revelation by Nigeria’s Finance Minister that the cost of servicing Nigeria’s debt has surpassed the Federal Government’s retained revenue by N310 billion in the first quarter of the year is very worrisome.
“First, this action must be in breach of all known reasonable debt-sustainability thresholds. Second, it puts a big question mark on the capacity of the government to manage its rising debt profile without endangering macroeconomic stability. Indeed, I am concerned that this action is already exposing Nigeria to financial stability issues as we slip from a medium risk of debt distress to high risk of debt distress.
“I had on several occasions warned that not only is the fiscal cost of government’s indiscriminate borrowing so enormous but has even greater opportunity costs as we sacrifice investments in critical areas, including education, health, and other basic services. This is certainly detrimental to Nigeria’s long-term growth.
“I urge the government to as a matter of urgency do the following:
“Take immediate steps to slow down the rate of debt accumulation by promoting more Public Private Partnerships in critical infrastructure funding and identifying more innovative funding options;
“Review the current utilization of all borrowed funds and ensure that they are deployed more judiciously. Specifically, government must ensure that all borrowed funds are for priority infrastructure projects that would generate income, boost output, and put the economy on the path of sustainable growth;
“Review the country’s debt strategy by focusing on concessional and semi-concessional sources with lower interest rates and relatively long-term maturity. The government must reduce the issuance of short-dated debt instruments;
“Take steps to improve its spending efficiency and drastically cut unnecessary and wasteful expenditures.”