Peter Obi, economists lecture Tinubu government on how to reduce borrowing

Peter Obi, economists lecture Tinubu government on how to reduce borrowing

• Former Anambra government laments “no visible utilization or impact” of loans
• Currency is not the only factor determining high commodity prices, experts say

Peter Obi, the Labor Party presidential candidate for the 2023 general election, yesterday joined with observers and analysts of the Nigerian economy to propose solutions to Nigeria’s “alarming” N97.3 trillion debt situation.

“I remain concerned about borrowing given the rapid growth in borrowing over the years and the associated economic impact. Even more worrying is the lack of support required by law to demonstrate the impact on the nation. , the fact that there is no corresponding visible use or investment,” Obi wrote on his X handle yesterday.

He therefore appealed to President Bola Tinubu's government to “stop accelerating borrowing and first reassess.” So that we can see what has been achieved with past loans so far and make better decisions in the national interest. ”

The former presidential candidate said, “In the new Nigeria of our dreams, our scarce resources will not only be given due consideration, but will also be productively and prudent in moving our country from consumption to production.” “It will be managed,” he promised.

He said, “As at the end of the second quarter (Q2) of 2023, our debt stood at N87.9 trillion, which was very worrying for us because we had a huge amount of debt, Especially since they were at a loss as to how to deal with their debts.” The previous administration borrowed over 30 trillion in means and means, but for me, the debt would have been over without a tangible corresponding investment that would benefit the country.

“More alarmingly, between the end of the third quarter of 2023 and the end of the fourth quarter of 2023, approximately N10 trillion was added to our debt profile without any visible and verifiable utilization. Now, our debt is once again at N97.3 trillion.''To my knowledge, this is the highest amount ever borrowed in a quarter.

“Last year, the total domestic debt service in 2023 was 4.4 trillion naira and the total external debt service was $3.5 billion, or about 4.9 trillion naira.In effect, about 10 trillion naira is currently unproductive. It is set aside for debt repayment.”

Mr. Obi further added, “So the amount we borrowed in the quarter was about N10 trillion and the amount we spent on debt servicing was also about N10 trillion, each in the four highest priority areas. This means that the amount exceeds the total amount allocated to the budget.” They are defense (3.25 trillion naira), education (2.18 trillion naira), health (1.33 trillion naira) and infrastructure (1.32 trillion naira). ”

According to recent data from the Debt Management Office (DMO) released in its fourth quarter report, Nigeria’s public debt outstanding as of December 31, 2023 stands at N97.341 trillion. This figure includes both domestic and external debt of the federal government, 36 states and the Federal Capital Territory (FCT).

This data reflects an increase of N9.43 trillion compared to the figure reported in September 2023. This increase is primarily due to new domestic borrowing by the federal government to finance a portion of the deficit outlined in the 2024 spending law, as well as multilateral spending. and bilateral lenders.


Total domestic debt is 59.12 trillion naira, accounting for 61% of the total public debt, and external debt is 38.22 trillion naira, accounting for the remaining 39%.

Nigeria's external debt structure mainly consists of loans from multilateral financial institutions, accounting for 49.77%. And bilateral lenders account for 14.02 percent of the outstanding external debt, totaling 63.79 percent, with most loans being concessional or semi-concessional.

Economist Percy Chukwuka-David criticized the country's current economic management for lacking a proven revitalization strategy. He emphasized the negative effects of over-reliance on oil, even as he warned that political leaders were spending recklessly without proper control measures.

He called for fiscal discipline in government spending, saying, “International institutions like the International Monetary Fund (IMF) and the World Bank are powerful enemies of third world countries. Unfortunately, Nigeria has become their slave. They give us money and conditions that keep us in debt bondage forever.

“Nigeria can take advantage of the bluffs of these international financial institutions and devise strategies to turn around the economy. For example, we can refine crude oil locally, supply petroleum products to all of Africa, and generate endless amounts of US dollars. “There are opportunities in the agricultural sector that the country has not yet exploited,” he said.

Muda Yusuf, founder and CEO of the Center for the Promotion of Private Enterprise (CPPE), said the debt figure was not unexpected. He cited the securitization of the 30 million Central Bank of Nigeria (CBN) revenue loan, which primarily addresses legacy debt issues, as a factor in the rise in debt levels.

But he added: “The progress towards fiscal consolidation over the past few months is beneficial.” This will put governments in a better position to address debt sustainability issues. The promise by the new leadership of the CBN to keep instrument lending within statutory limits is also encouraging. ”

Meanwhile, another economist, Chijoke Ekechukwu, explained that foreign exchange (exchange) is not the only factor that determines the high prices of goods and services.

The Managing Director and Chief Executive Officer of Dignity Finance and Investments, Mr. Ekechukwu, disclosed this yesterday in Abuja.

The naira fluctuates on the official market, trading between 1,300 and 1,240 naira to the dollar.

However, Ekechukwu said the dollar collapse currently occurring in the official market may not have a significant impact on commodity prices.

“Traders are still holding inventories of goods purchased at high exchange rates. The Naira has only gained momentum in the last two weeks. Therefore, it will only take a short period of time to see stability.Forex Fear of volatility causes traders to hold onto old prices.

“Secondly, exchange rates are not the only factor determining high prices. The high prices of petroleum products such as diesel and gasoline are the main determining factor. Food shortages due to security instability in the north, where agricultural activity is active, are also a contributing factor. Among other things, this is another determining factor,” he said.

He pointed out that the prices of petroleum products are determined by external sources beyond the government's control. According to him, it's exchange rates and world oil prices.

“World oil prices are not controlled by Nigeria. But if the government starts subsidizing petroleum products again, prices will come down. Once refineries start operating optimally, petroleum products “The price may also come down,'' he added.


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