The Federal Budget Office has advised Nigeria’s government to suspend salary increases for government agencies and eliminate the fuel subsidy to avert a debt crisis and ensure Nigeria’s debt sustainability.
This was disclosed by the Director General, Budget Office of the Federation, Ben Akabueze while speaking yesterday at the 46th Institute of Chartered Secretaries and Administrators of Nigeria, ICSAN, Annual Conference in Lagos, on the theme: ‘The National Debt Burden: Causes, effects, and realistic economic solutions’,
This pronouncement comes after Nigeria’s debt service cost surpassed its revenue in the first four months of the year. The debt service gulped a sum of N1.94 trillion between January and April 2022, against a retained revenue of N1.63 trillion.
Ben Akabueze stated that it is crucial to ensure that public debt is sustainable to meet this challenge and allay worries about rising debt and debt servicing.
He said: “To address this challenge and to relieve the concern on the rising debt and debt service, it is important to ensure that public debt is sustainable and for this to be, urgent decisive measures are required to avert public debt crisis and these steps are critically around enhancing revenue and then improving expenditure and blocking leakages.”
He also asserted that elimination of the fuel subsidy by the scheduled deadline of the end of June in 2023 or earlier and suspension of future pay hikes would ease the debt burden.
“The critical steps include the implementation of the relevant recommendations and discontinuation of the PMS subsidy by the end of June next year as announced or earlier date. Suspension of new salary increases for government agencies and addressing the issues of pipeline vandalism and reducing oil theft through the reintegration of the war against pipeline vandalism and oil theft by security agencies,” Akabueze added.
What you should know
The Federal Government is already negotiating raises for some government employees. The Federal Government has revealed that it can only afford a 23.5% wage hike for lecturers and a 35% compensation increase for professors as it attempts to resolve the present impasse with the Academic Staff Union of Universities (ASUU).
Nonetheless, the government is struggling to meet salary obligations, with Nairametrics reporting that at least 12 states owe at least one month’s compensation to their employees as of July 28, 2022. Furthermore, governments are failing to meet the new Minimum Wage, which increased from N18,000 to N30,000.
In 2021, the Federal Government of Nigeria spent N4.22 trillion on debt servicing, up 29.3% from N3.27 trillion the previous year, but income climbed only marginally by 9.3% to N4.39 trillion.
Nigeria’s debt service-to-revenue ratio climbed from 81.1% in 2020 to 96% in the fiscal year under review. Meanwhile, Nigeria’s overall debt stock increased to $100.07 billion in the first quarter of 2022, up from $95.78 billion the previous quarter.