Sustainable Debts and Unsustainable, Invisible Projects

Ordinarily, there should be no cause for alarm. After all, Nigeria is still within the threshold, with its debts so much less than 40 percent of Gross Domestic Product (GDP). In fact it is still within its earlier threshold of 25 percent.
The country’s external debt is $11 billion, while its domestic debt is $55.2 billion or N11 trillion. Put together, Nigeria’s total debt is N65.2 billion dollars or N103.3 trillion. With a GDP of$ 521.8 billion, it then means that the ratio of Nigeria’s debt to GDP is a mere 12.55 percent. Many thanks to the rebased economy which saw the country’s economic growth shot up like a rocket, well ahead of its closest rival, South Africa and Egypt. The GDP of South Africa is put at $350.6 billion while that of Egypt is put at $272 billion.
But the global threshold is 40 percent of GDP while Nigeria’s country specific limit for 2011-2014 was 25 percent of GDP.
Nigeria’s debt threshold to GDP ratio was  raised up from 40 percent to 56 percent along with other countries by donor multilateral agencies, thereby creating bigger space for the country in the global financial market to explore through borrowing to meet their financing shortfalls.
The Debt Management Office (DMO)  had hinted that Nigeria will continue to maintain a threshold of debt to Gross Domestic Product (GDP) ratio of 40 percent in order to ensure macroeconomic stability and inclusive growth of the economy in the years ahead.
So the fact that Nigeria’s debt has risen in recent years is not the issue. Analysts are concerned about the spending aspect. They lament that Here is nothing to show for the rising debt.
Wale Abe, chief executive officer of the Financial Market Dealers AssociTion of Nigeria (FMDA), said though the debt is creeping, it has become necessary to pay serious attention as its servicing will again pose a problem to solving other Nigeria’s immediate problems.
According to him, it is even more important that the government of the day monitor what these debts, particularly by the states are being used for. He said, it will be a shame that that the rising debt is misused and the country will suffer for what has been misappropriated.
Director General of the DMO, Dr. Abraham Nwankwo called on all tiers of government to utilise public funds for the good and development of the people, expressing worry that the ‘gross misuse of borrowed public funds’ by Public Officers contributes to the rising debt profile.
Dr. Nwankwo also stressed that the way to achieve good governance in Nigeria was for public office holders to run a transparent fiscal management.
“Government should draw on the positive side of borrowing,” he said, stressing that some developed nations depend heavily on borrowing to sustain their economies.
He specifically emphasised the need for the youths, as leaders of tomorrow, to develop the attitude and understanding of fiscal responsibility in order to hold their leaders accountable.
While encouraging state governments to source funds for developmental purposes, the DMO boss pointed out that the cynicism that usually trail decisions to borrow was due to the unpleasant cases where governments borrow money and misappropriate it.
He said that the misappropriation of borrowed funds had resulted in unsustainable debt portfolio.
The DMO boss, however, noted that under the President Muhammad Buhari’s administration, ‘the economy is becoming more robust’ and urged Nigerians to cooperate with the administration in order to achieve the desired change.
There has been consistent controversy over debt management in Nigeria.
The controversy includes primary objections to and justifications for borrowing.
Most of the objections focus on the interest cost that is created, the inflationary pressures that are associated with large-scale borrowing, debt illusion, crowding out effect and generational inequity of debt burden.
Today, the cry and protest over debt management are over non-sustainability of public debt, borrowing without due process, continued borrowing on non-concessionary terms and the use of loan proceeds for purposes other than those for which they were obtained.
It is for this reason that the Debt Management Office assembled students drawn from various higher institutions across Nigeria to sensitise them on how to monitor how such borrowed funds are spent.
Making their contribution, a representative of the students union, Salahudeen Lukman, advised both the State and Federal Government to ensure that all funds borrowed for development of the education and other critical sectors of the economy were judiciously utilised in order to ensure growth and development.
Abiodun Joko,  retired banker told Leadership that a stitch in time saves nine. According to him, if strident positions are not taken on how monies borrowed are used by federal, states and local governments, we might end up reviving debts that are in private accounts.
Joko said, this will lead to starving the economy much needed money to grow, as monies meant for growth in the future will be used to service debts that have not been productive.
Joko recalled that some state governments were ready to divert bailout  funds meant for salary payment if not for the outcry.
Okorie Magnus, a business man based in Lagos, advised that the President Muhammadu Buhari’s war against corruption will yield so much fruits if he begins to probe debts accumulated by past administrators, locally, in the state and even the Federal Government and find out what they were used for.
Okorie said it will be very sad for a generation that did not borrow money and saw nothing on ground to tying projects to loans to pay any such loans.
He is looking forward to see government officials who diverted monies meant for project to personal impulse brought to book.
The DMO boss, Nwankwo said Nigerians should be proud that the economy is so resilient, that we have enough food for our population and that food prices, in spite of what has happened in the past seven months or more continues to be moderate.
“That shows that over the years, we have attempted to improve, to diversify the economy, to strengthen our agriculture and that is a source of inspiration for all of us,” he said.
He urged Nigerians to use “the opportunity of President Muhammadu Buhari’s change to do better than we did in the past by working hard in making sure that agriculture continues to expand and modernise so that we can have real food security.”

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