The Director General of the Budget Office of the Federation, Mr Ben Akabueze has raised the alarm that Nigeria is approaching the borrowing limit given to the country.
Speaking at the International Conference Centre in Abuja, Akabueze warned that the country has exceeded its 30 per cent borrowing limit and approaching the 100 per cent risk limit.
This comes after President Muhammadu Buhari requested a new loan of eight hundred million dollars ($800m) to expand the National Social Safety Net Programme (NASSCO).
Senate President Ahmad Lawan during plenary on Wednesday, said the loan would be sourced from the World Bank and would extend the unconditional cash transfer programme currently implemented by the Federal Government.
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He said:
“While the size of the FG budget for 2023 created some excitement, the aggregate budgets of all governments in the country amount to about 30 trillion Naira. That is less than 15 percent in terms of ratio to GDP.
“Even on the African continent, the ratio of spending is about 20 percent. South Africa is about 30 percent, Morocco is about 40 percent and at 15 percent, that is too small for our needs.
“That is why there is a fierce competition for the limited resources. That can determine how much we can relatively borrow. We now have very limited borrowing space, not because our debt to GDP is high, but because our revenue is too small to sustain the size of our debt. That explains our high debt service ratio.
“Once a country’s debt service ratio exceeds 30 percent, that country is in trouble and we are pushing towards 100 percent and that tells you how much trouble we are in. We have limited space to borrow.
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“When you take how much you can generate in terms of revenue and what you can reasonably borrow, that establishes the size of the budget. The next thing would be to pay attention to government priority regarding what project gets what.
“The budget is not a shopping list. In the end, the budget only contained expenditure.”
However, checks revealed that the expansion of the National Social Safety Net Programme was a positive step toward addressing poverty in Nigeria. The programme would provide much-needed support to vulnerable groups, such as the elderly, people with disabilities, and pregnant women.
