The Nigerian economy may yet again witness another damning loss and negative financial effects, which may lead to recession with the random projects and expenditure being ventured into by the federal government.
Just recently, the Minister of Finance, budget and national planning confirmed these concerns of financial experts and economic analysts by expressing her own worries over the financial status of the nation’s economy and stating that she has projected that Nigeria’s debt profile would hit N38.68 trillion by December 2021.
She made this statement while addressing the senate committee on local and foreign debts on Tuesday, November 3. 2020. The Finance Minister explained to the senate that estimates on both external and domestic debt would rise to N32.51 trillion by December 2020.
In line with the research conducted by the Debt Management Office, the total public debt stock, which comprises the debt stock of the three tiers of government, stood at N31.009 trillion at the end of June 2020.
“The total public debt stock comprising the External and Home debts of the Federal and state governments, and the federal capital territory stood at N31.01 trillion (USD85.90 billion) as at June 30, 2020,” she said.
“It is projected, based on existing approval, to rise to N32.51 trillion by December 31, 2020, and N38.68 trillion by December 31, 2021.”
In 2019, the International Monetary Fund estimated that Nigeria’s debt to gross domestic product (GDP) ratio stood at 29 percent; and this included the Asset Management Corporation of Nigeria (AMCON) debt and power sector financing, which are large amounts.
The federal government spent 97.5 percent of its January to May 2020 revenue on debt servicing.
During the five-month period, N1.58 trillion was spent on debt servicing; representing 97.5 percent of the N1.62 trillion revenue generated.
The minister Mrs Zainab Amhed has likened the numerous projects that has been abandoned or dilapidated in various parts of the country, to be a result of lack of proper funding which according to her is also a result of reduced funds in the national treasury, and decreased revenues.
In her statement she reinterated that, “I am one person that feels that we should just take one major road in one geopolitical zone and finish it.
“We were not able to do that because of the processes in which appropriation is made both at the executive as well as the legislative arms of government.
“Truly, if we are able to just take one or two projects at a time and complete it before going to the next one, it will be better.
“You will see a road that costs, maybe N5 billion, and you will see a provision for N100 million, N200 million or 300 million.
“Of course the project will never finish. After two years, the contractor comes back and asks for variation, and the amount keeps growing.
“I wish that we get to a point when we sit down as government and agree that let us select a few projects, finish them in 2020, and then in 2021, we select the next.
“So that on a geopolitical basis, those selections are done as a collective process.”
Mrs Ahmed however concluded by reaffirming that major and well renowned roads and projects like the Lagos-Ibadan highway, 2nd Niger Bridge, East-West road, and Abuja-Kaduna-Kano road, are ongoing due to availability of funds.
According to economic analysts who reacted to the recent submission of the Finance Minister, they claimed that, funding of projects and it’s executions should be done in such a way that it would not jeopardize the sanity and safety of the nation’s economy because that will bring more hardship to citizens and hurt the economy’s growth rather than the development which such projects set out to achieve in the first instance.