Muda Yusuf to Buhari: Focus on handing over, Leave loans to incoming govt

“Unfortunately, most of these borrowings are not as transparent as they should be, because annually you have the budgets that are presented and you have some details provided but none of these documents contains details about borrowings, particularly from the CBN.”

Following a fresh loan request of $800 million dollars by President Muhammadu Buhari, just 17 days to the end of his tenure, an Economist, Dr Muda Yusuf has expressed great concerns about the fiscal operations of the administration which he said could plunge Nigeria into a serious disaster.

Yusuf who is the Chief Executive Officer of Centre for Promotion of Private Enterprise disclosed this on Friday during a breakfast television show on Arise Television, monitored in Abuja.

Noting that Nigeria’s public debt was about N46 trillion as of the end of last year, Yusuf said the figure could rise to N80 trillion by the end of this year.

He said; “The state of debt and revenue is something that is very scary and it is like an economy that is almost on the brink, an economy that is probably grappling with the problem of insolvency. That is the situation because we are gradually getting to a position where we use our entire revenue to service debts.

We are almost at that threshold and the situation may even get worse because as at the end of 2022, the public debt was N46 trillion. Now, with the securitization of the ‘Ways and Means’, we have been told by the Debt Management Office DMO that we will be talking about something close to N77 trillion. Between January and now, there also have been all manner of borrowings either from the CBN or whatever. So, by the end of this year, we probably will be getting close to almost N80 trillion”.

According to him, even before the securitization, in the 2023 budget, the debt service component of the budget was about N6.3 trillion while total revenue was N10 trillion.

He said; “Do not forget we hardly ever achieve 100 percent performance in revenue. So, you have to discard that maybe by 20 or 30 percent. So, it is really a very scary situation and certainly, we cannot afford to continue this way. Something needs to happen very quickly, very urgently so that the entire system does not collapse. It is a very disturbing situation and the way it is, maybe by the end of this year, perhaps our debt service component spending will be getting close to N10 trillion”.#

The economist also lamented the lack of transparency with regards to government borrowings, especially from the Central Bank of Nigeria CBN.

He said drastic actions have to be taken so that the country does not end up in the hands of the International Monetary Fund IMF which he said could be more complicated.

“Unfortunately, most of these borrowings are not as transparent as they should be, because annually you have the budgets that are presented and you have some details provided but none of these documents contains details about borrowings, particularly from the CBN.

“Normally, we have subheads on the amount of deficits and how the deficits will be financed from domestic and foreign sources. In none of the documents over the years has it been reflected that so much is coming from the CBN and yet we have something almost to the tune of N23 trillion cumulatively. That is scary and if you look at even the data of bank credit to government (which is essentially borrowing from the CBN) as of February this year, it is showing about N28 trillion, although it went slightly down in March to about N27 trillion. We need to do something very serious about the fiscal operations of the government so that we do not end up with the IMF because if we end up with the IMF, it will be a completely different story. That will even be a more complicated matter to handle.

Generally, we reckon with the fact that government is a continuum. It is like a relay race. But for something as fundamental as this, I don’t think there is any justification that just few days to the end of the administration, the administration is making a request for this. My submission is that this $800m request either for subsidy or social investments, I think we should hold on. We would allow the incoming administration to deal with all of these issues.

What is the logic of going to borrow especially now that the debt situation is getting to a very frightening level? I don’t think there is a basis for borrowing. I don’t think it is the business of this outgoing administration to embark on new borrowing. It is completely unnecessary. I think by now what should be happening is just rounding off things, giving us a balance sheet of what they have done, an account of what they have done and not engaging in such major transaction of this nature”, he added.