The former Central Bank of Nigeria (CBN) deputy governor, therefore, advised the Federal Government to urgently “halt this borrowing binge, which is exposing the country to a possible future debt peonage, considering our external debt by 2015 was $10.31 billion and in six years, has doubled with the possibility that it would still go up by 2023 when President Muhammadu Buhari would have completed his two terms
tenure of eight years.”
According to Moghalu, in a statement yesterday by his Special Adviser, Media & Publicity, Ndukaku Nwosu, the development is unprecedented, unsustainable and alarming.x
The borrowing spree, he noted, represents a 218 per cent increase. He said: “The total outstanding public debt stock increased by 173per cent in the same period, from N12.11 trillion to N33.10 trillion.
“On the average, over N3.6 trillion is being added to the public debt yearly. This massive borrowing and the infrastructure investment that has been used to justify it, have grossly under-performed.
“Instead of delivering economic growth, the economy has been twice in recession, and when out of it, growth has been underwhelming at two per cent at best. And rather than the debt-funded infrastructure projects creating ample number of jobs for the citizens, the national unemployment rate has increased to 33.1 per cent, while youth unemployment has reached 42.5 per cent.”
The Young Progressives Party (YPP) presidential candidate in the 2019 general elections argued that under a coordinated economic policy by a competent government, the debt capital outlay would have catalysed private sector investments and sizeable foreign direct investment (FDI) flows into the economy.x
He insisted that public-private partnerships should be the dominant approach to infrastructure development in a country like Nigeria, instead of contract awards that, from information available from comparable projects in nations such as
Ghana and Ethiopia, are at best overvalued and, at worst, grossly inflated in their costs.
But in the “real situation of the incompetence of the government in the last six years,” the Anambra State native noted that, “businesses have been groaning and FDI inflows have decreased. Over the past months, debt service cost has taken up more than 90 per cent of government revenue.”
The CBN ex-official went on: “This means that for every one naira generated in public revenue, more than 90 kobo is used to pay the interest on government’s loans. It is debilitating that Nigeria is spending so much money that should go to development towards merely servicing the interest on our debt, not repaying the debt.
“It also makes justifications based on our debt to GDP ratio off-point.”He contended that the most populous black nation was on a “dangerous, debt-induced fiscal cliff.”
Put simply, Moghalu stated: “The Government of Nigeria is mortgaging the future of our country’s youths. We have to stop further borrowing and start to manage the current obligations in order to avoid a sovereign debt default or, at best, a costly restructuring.”x
As alternatives to debt, he implored the current administration to focus on increasing domestic revenue, by expanding the tax base – not by increasing tax rates “as has been done with the Value Added Tax (VAT) – and introducing reforms for ease of paying taxes while abolishing multiple taxation.”
Taxation, the presidential hopeful observed, required the government to maintain a social contract with the people.
“At the minimum,” the government must restore security to the country so that citizens can go about their businesses, assured of their safety,” he added.
Moghalu reminded Nigerians that when he ran for the presidency in 2019, he promised to introduce a forensic audit of the budgets if elected, as part of a broader reform initiative for transparency and accountability in public finance.
“This remains very important for ensuring value for money, and to support public revenue growth by restoring investor confidence in the economy,” he stressed.
To realise a positive long-term public revenue outlook, the don said the economy must be successfully diversified through value-added exports.x