Dipo Olowookere
By Dipo Olowookere
A renowned economist and Partner at SPM Professional, Mr Paul Alaje, has warned that the debt profile of Nigeria may continue to rise, with the nation not making enough to service it, and resorting to borrowing to pay interests on the borrowings.
He said this when he appeared as a guest on Arise Television’s breakfast programme, The Morning Show, on Monday, January 8, 2024.
Business Post reports that in December 2023, the Debt Management Office (DMO) said Nigeria’s total public debt stock was 87.91 trillion in the third quarter of last year.
It was also reported by this newspaper that after the approval of the securitisation of the N7.5 trillion ways and means by the National Assembly, the debt profile of the country could rise to N95 trillion.
Speaking on Arise TV today, Mr Alaje charged the government of Mr Bola Tinubu to look for innovative ways to generate more revenue for the country, especially from the solid minerals sector, tasking the federal government to slow down its appetite for borrowing and improve its revenue.
“The truth is that, by 2025, we will have to borrow to service debt. What does that mean? We will still put our revenue projection but by the end of 2025, when the 2026 budget is presented, we may need to borrow to service debt, I hope this will not be the situation because it is not a good projection.
“Unfortunately, if we don’t depart from the current situation, this may be where we find ourselves,” he said on the show monitored by Business Post.
Speaking further, he said, “You ask whether the 2024 budget inspires hope and by our training and the oath we swore, it is not for me to say yes or no but there are things we need to look at in the budget to arrive at an answer.
“Nigeria is expected to grow between 7 and 12 per cent gross domestic product (GDP) if we want to be at par with other nations. The budget has said we should grow by over 3 per cent; the inflation, according to the Central Bank of Nigeria (CBN) is expected to be 6 to 9 per cent, but this budget said 21 per cent this year perhaps because it is the first budget of President Tinubu. This budget is already telling us that things are going to be tough, that is the price of commodities you bought in 2023 will increase by an average of 21 per cent in 2024.
“Most importantly, Mr President spoke on the human development index and he said it is the key area he is focusing but let’s zoom on it a little. We are expected to invest between 20 and 25 per cent of our annual budget but when you see what went into education, we are doing less than 6 per cent instead of 15 to 25 per cent.
“Let’s look at health, which should be 15 per cent based on the Abuja Accord but the 2024 budget is doing less than that. Are these inspiring as you asked me earlier? I want to believe his next budget would be better.
“I hope the budget deficit does not increase times two because we have N8 trillion proposed deficit in 2024 but that may rise to about N12 trillion or double. Just write this down and keep it to around November or December when you will see a supplementary budget without revenue expectation as we have done in the last 12 years.
“You should start to see pressure from the end of the first quarter when the government compares its revenue expectations with the actual earnings; there will be a mismatch because fundamentally, there is a need for an adjustment that has not been done,” he stated.
