The Federal Government on Tuesday explained that it was discouraging state governments from borrowing because most of them were experiencing difficulties in servicing their existing debts. According to an article by the Punch, Minister of State for Finance, Bashir Yuguda, said this while delivering a lecture titled: ‘Nigeria’s Economic Policies and Reforms’ at the National Defence College, Abuja on Tuesday, described the country’s debt profile, particularly that of the states, as scary.
He said a lot of states had become heavily indebted that they did not have enough revenue to service the loans they took and carry out other government activities.
“The domestic debt profile of some states is scary. They are so much in debt that only a small amount of their allocations get to them at the end of the day. This is because most times, money for debt servicing is removed from source.
“This is the reason why we discourage them from borrowing. Even if they will, it has to be on prioritised projects with high returns. Prioritisation is key in this difficult time.”
The minister said that the Federal Government was currently focusing on certain sectors that had the potential of improving the nation’s growth, while simultaneously creating jobs.
For example, he said the government was seeking to reposition the agricultural sector through the Growth Enhancement Support and the agricultural lending scheme, among other programmes.
Yuguda said that in the manufacturing sector, the government was putting in place policies that would drive investors to make meaningful investments.