Again, the Federal Government is set to take a new loan valued at $2.8billion. This concessionary loan meant to partly fund the 2020 budget is apart from the $29.96billion the government plans to borrow to finance infrastructure and the $3billion loan it is seeking from the World Bank to fund the power sector.
The penchant of the current administration for borrowing is legendary. Its appetite for debt accumulation took the country’s public debt to N26.215 trillion as of September 30, 2019, from the N12.118 trillion it was at the end of May 2015 when the current administration took over. That means the country’s debt profile grew by over N14 trillion in less than five years. This has heightened the concerns of many Nigerians who are not only worried about the ability of the government to pay back the debt but are also troubled that the country may find itself in the same quandary it was before the debt forgiveness of 2005 when it was weighed down by debt burden and was unable to properly fund critical sectors such as health, education and infrastructure.
Consequent on the country’s high debt profile, debt servicing cost has been skyrocketing. In 2014, Nigeria spent N712bn on servicing debt but this rose to N943bn in 2015, N1.48trillion in 2016, N1.84trillion in 2017, N2.014trillion in 2018, N2.09trillion in 2019, yet it is planning to expend N2.452trillion in 2020. The delusion of government which goads it into the seemingly bottomless pit of debt accumulation is the vague belief that its debt to Gross Domestic Product (GDP) ratio is within reasonable limits. Finance Minister, Zainab Ahmed, has said ad infinitum that the country’s debt, which currently stands at 19 per cent of its GDP, is safe. She has also said, however, that while the country does not have a debt problem, it has a revenue problem. But the fact is that it is revenue problem that births debt burden. When a country demonstrates gross lack of capacity to manage its resources, it has set the stage for a resort to borrowing.
Both the federal and state governments need to apply the brakes on their debt accumulation drive. Growing the country’s debt by over 116 per cent in less than five years without growing the economy at the same rate is quite frightening. This trend is particularly worrisome because the current administration promised frugality before its ascension to power. The All progressive Congress (APC) had condemned the Goodluck Jonathan administration for its profligacy with a promise to tread a new path. But what has changed now if in less than five years the nation’s debt profile has gone up by almost 120 per cent?
Perhaps the people would have been comforted by the unprecedented debt profile had there been a corresponding level of development. But which projects were financed with the gargantuan debt? Which structures can Nigerians point to as a justification for the ever rising debt? Where are the factories built with the borrowed money? Where are the new jobs created? Where are the hospitals built? Where are the new airports? Where are the new roads? Where has all the money gone? The plain fact is that the governments deployed the bulk of the borrowed money to financing recurrent expenditure. Most of the borrowed trillions went into running the government; paying salaries and allowances. This is not only heart-rending. it is exceedingly tragic.
If the debts were spent on consumption, where lies the hope of repayment? The implication of this is that unless there is a volte-face, the heavy debt burden will slow down development in the country, escalate the people’s poverty and consign future generations of Nigerians into an excruciating debt bondage. The time to stop the excessive borrowing is now!