Akabueze raises alarm over Nigeria’s borrowing plan

Director General Budget Office of the Federation Ben Akabueze has raised the alarm over Nigeria’s borrowing plan, saying the nation was fast exceeding its limited borrowing space.

Akabueze spoke Wednesday at the induction of newly elected lawmakers of the 10th National Assembly, at the International Conference Centre (ICC) Abuja.

His concerns and fear came at a time President Muhammadu Buhari forwarded a fresh loan request of $800 million to the National Assembly to service the needs of vulnerable 10.2million households at N5, 000 each.

The president said the loan, as part of the administration’s social intervention programme, would stimulate activities in the informal sector; improve nutrition, health, education and human capital development of beneficiary households.

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Speaking at the induction of the lawmakers-elect, Mr. Akabueze said the country had one of the lowest Gross Domestic Product (GDP) to debt ratio in the world.

He said: “While the size of the FG budget for 2023 created some excitement, the aggregate budget of all governments in the country amounts to about 30 trillion naira. That is less than 15 percent in terms of ratio to GDP. Even on the African continent, the ratio of spending is about 20 percent. South Africa is about 30 percent, Morocco is about 40 percent and at 15 percent, that is too small for our needs.

“That is why there is a fierce competition for the limited resources that can determine how much we can relatively borrow. We now have very limited borrowing space, not because our debt to GDP is high, but because our revenue is too small to sustain the size of our debt. That explains our high debt service ratio.

“Once a country’s debt service ratio exceeds 30 percent, that country is in trouble and we are pushing towards 100 percent and that tells you how much trouble we are in. We have limited space to borrow.

Akabueze also berated the nation’s budgeting system, saying Nigeria has no organic budget law.

“The Federal Government of Nigeria does not have an organic budget law. It is really unfortunate that we don’t have an organic budget law. Hopefully, there is one in the work in the 9th Assembly and may be passed before the Assembly winds up.

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“I don’t know any serious country in the world that does not have an organic budget law. Each country has to determine its budget system that works for it. Budget is multi-dimensional in coverage. One, it is political because it allocates scarce resources of the country among multiple competing and sometimes, conflicting, interests.

Meanwhile, with just 19 days to end a two-term tenure of eight years of his administration, President Buhari has requested the Senate to approve a fresh $800 million loan from the World Bank.

The borrowing request for parliamentary approval for the fresh borrowing was contained in a letter he wrote to the Senate, and read at plenary Wednesday.

In the letter dated May 2, 2023 which was acknowledged as received on 10th May, 2023, the president said the credit facility was needed for the National Social Safety Net Programme (NASSP).