The Fiscal Responsibility Commission (FRC) has called for a moratorium on new debts, especially foreign debts, except there are exceptional circumstances justifying the new debt, and this should be in accordance with the provisions of the FRA, 2007.
The FRC also advised the Federal Government to restructure debts to ensure a longer period of amortization in a bid to reduce the percentage of retained revenue committed to debt service.
It added that the government should target not more than 50 percent of retained revenue for debt service in the medium term of four years.
The FRC urged the Federal Government to stop borrowing for recurrent expenditure (personnel and overheads) and dilatory capital expenditure that adds no value to economic growth, wealth creation and development.
These were part of the recommendation made by Charles Ababa Esq Head, Directorate of Legal, Investigation & Enforcement of the Fiscal Responsibility Commission at a Media-Civil Society Roundtable on Fiscal Responsibility and Debt Management held on Monday in Abuja, put together by OrderPaper Advocacy Initiative.
Abana said, “There should be a moratorium on new debts, especially foreign debts, except there are exceptional circumstances justifying the new debt and this should be in accordance with the provisions of the FRA, 2007.
“Restructure debts to ensure a longer period of amortization in a bid to reduce the percentage of retained revenue committed to debt service. Target not more than 50% of retained revenue for debt service in the medium term of four years.
“Stop borrowing for recurrent expenditure (personnel and overheads) and dilatory capital expenditure that adds no value to economic growth, wealth creation and development. Ensure compliance with Section 45 of the FRA, 2007.”
He also recommended that there should be a reduction of overhead capital and the cost of governance so as to make more resources available for developmental capital, stressing that each of the capital expenditures should have a proper cost-benefit analysis open to the public.
Furthermore, he recommended that more public assets should be slated for privatisation so as to increase resources expected from the privatisation exercise while reducing new sovereign borrowing, stressing that the comatose public refineries are candidates for privatisation.
“Furthermore, more public infrastructure projects should be considered under the public-private partnership model so as to reduce the pressure for public funding through debt.
“Set a debt ceiling in accordance with S.42 of the FRA. This ceiling should be defined inter alia in the relationship of debt to revenue
“Consider state-contingent debt instruments (SCDIs) where repayment obligations are tied to the capacity to repay and this should include revenue bonds and payments linked to the price of oil”, Abana said.
He pointed out that the Medium Term Expenditure Framework (MTEF) needs to set targets and make projections on employment creation capital importation and Foreign Direct Investment (FDI).
He called for the establishment of a public review mechanism, in addition to Legislative oversight, through which the cost-benefit analysis of loans and their implications are ascertained before the Federal or State Governments enter into loan agreements.
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