The presidential candidate of the Labour Party, Peter Obi, has cautioned the present administration against further borrowing for consumption.
Obi handed down the words of caution in a series of tweets on his social media page yesterday.
He said: “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 that received fiscal bailouts 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 per cent of the previous year’s revenue.”
It would be recalled that the Minister of Finance, Zainab , had recently announced that Nigeria’s debt service, which has hit N1.94 trillion, has overshot the nation’s earnings by N310 billion.
This is even as the projected expenditure on fuel subsidies is expected to hit N6.72 trillion by 2023.
Obi warned that it has become imperative to restrict Federal borrowings to the statutory 5% of the previous year’s revenue.
Last month 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.