Director General of LCCI, Mr. Muda Yusuf, While responding to the President Mohammadu Buhari’s loan request already placed before the National Assembly for approval, said the growing national debt is a cause for concern as the debt profile since inception of the present government has ballooned from N12.6 trillion in 2015 to N25.7 trillion in as at second quarter of 2019, an increase of 104 per cent.
“There is also the bigger worry about the capacity to service the debt. For instance, the debt service provision in the 2019 budget was a whooping N2 trillion; whereas the total capital budget was N2.9 trillion; this implies that the debt service commitment was 70 percent of capital budget allocation.
“In the 2020 budget, debt service commitment and recurrent spending are beginning to crowd out capital expenditure.
“This trajectory is not consistent with our national aspiration to build infrastructure and a competitive economy.
“Debt service of N2.45 trillion is more than the capital budget of N2.14 trillion in 2020 budget. That is 114 percent of capital budget.
“It is against this background that the new request for $30 billion is troubling. Care should be taken to avoid a full blown debt crisis.
“As the currency depreciates, the burden of servicing foreign debt would intensify. This is a major problem with increasing the stock of foreign debt.
“This underlines the need for appropriate policy choices to attract domestic and foreign private sector capital for infrastructure financing.
“The government needs to look beyond tax credit in its quest for more complimentary funding sources for infrastructure. We should be looking more in the direction of equity financing.
“But for this to happen the policy and regulatory environment must be right. It is also critical to review the spending structure of government sand the cost of governance.
Also “The ballooning recurrent expenditure, in the face of declining revenue is a cause for concern.”