Nigeria’s Revenue Too Small To Sustain Size Of Debt – Nwabueze

Posted by Nwa Diokpa Business News, Latest Headlines Thursday, May 11th, 2023

(AFRICAN EXAMINER) – The director-general of the budget office of the federation, Ben Akabueze, has stated that Nigeria’s borrowing space keeps reducing because of the inability to service debt.
Akabueze made this known on Wednesday in the induction of newly-elected lawmakers of the 10th national assembly in Abuja.
He stated that the ratio of the country’s budget to its gross domestic product (GDP), unlike other countries, is less than its needs.
“While the size of the federal government budget for 2023 created some excitement, the aggregate budgets of all governments in the country amount to about N30 trillion. That is less than 15 percent in terms of ratio to GDP,” Akabueze said.
“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 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.
“When you take how much you can generate in terms of revenue and what you can reasonably borrow, that establishes the size of the budget. The next thing would be to pay attention to government priority regarding what project gets what.
“The budget is not a shopping list. In the end, the budget only contained expenditure.”