Lagos Chamber of Commerce and Industry (LCCI) has condemned the Nigerian Senate’s decision to approve President Muhammadu Buhari’s loan request.
On Thursday, March 5, 2020, the 9th Senate under the leadership of Ahmed Lawan, gave a nod to the president’s request despite being earlier disapproved by the 8th Senate, which was under the leadership of Bukola Sarai.
In his reaction to the development, Director General (DG), LCCI, Dr Muda Yusuf said the loan had brought the country’s total debt stock to $108 billion, even though 15% of the debts were owed by state governments.
Yusuf said, “The growing national debt is a cause for concern as the debt profile grew from N12.6 trillion in 2015 to N26.2 trillion in the third quarter, 2019, an increase of 108%.
“An additional $22.7 billion borrowing would bring the total debt stock to $108 billion, although 15% of the debts are owed by the state governments.”
The LCCI boss also raised concern over the country’s capacity to sustain her debt servicing.
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He added that “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% of the capital budget allocation.
“Debt to revenue ratio was about 30%, which is also on the high side. In the 2020 budget, the total revenue could barely cover debt service commitment and recurrent spending.
“The opportunity cost of high debt service commitment for the economy and citizens is very high.”
What you should know: Last year, precisely between January and November 2019, the Buhari-led administration spent no less than $1.31 billion to service Nigeria’s external debt. This is according to data obtained from the Central Bank of Nigeria (CBN).
The data has it that the figure stood at $1.31 billion, compared to $1.47 billion in the corresponding period of 2018.