Presidential Candidate of the Labour Party, Peter Obi has warned that it has become imperative to restrict Federal borrowings to the statutory 5% of the previous year’s revenue.
Obi disclosed this in a statement on Thursday evening, warning that Nigeria must limit borrowing for consumption.
He also warned that most states that received fiscal bailouts did not invest them properly.
What Obi is saying
Obi urged that, as a matter of urgency, Nigeria must stop borrowing for consumption but only borrow to invest in regenerative development projects and other productive ventures.
“It’s ironic that states which received fiscal bailouts did not invest them properly, did not repay the loans, and are still borrowing beyond their revenue earnings.
“Also, it has become imperative to restrict Federal borrowings to the statutory 5% of the previous year’s revenue,” he added.
As a matter of urgency, Nigeria must stop borrowing for consumption, but only borrow to invest in regenerative development projects and other productive ventures.
— Peter Obi (@PeterObi) August 10, 2022
What you should know
- Nairametrics reported last month that the Ministry of Finance, Budget and National Planning revealed that Nigeria’s debt service cost surpassed its revenue in the first four months of the year. Notably, debt service gulped a sum of N1.94 trillion between January and April 2022, against a retained revenue of N1.63 trillion, becoming 118% of revenue.
- According to the report, as of April 2022, a sum of N1.63 trillion was earned as the federal government retained revenue, accounting for 49% of the prorated target of N3.32 trillion. This is significantly lower than the projected revenue of N9.97 trillion for the entire year.
- While N1.94 trillion was spent on debt service, N1.26 trillion was spent on personnel costs, including pensions. Also, N773.63 billion has been spent on capital expenditure during the period.
