New Telegraph

Debt: Nigeria’s economy in serious danger –Experts

Analysts

Economic experts, yesterday, waved the red flag over the state of Nigeria’s economy, warning that it may soon collapse under the weight of heavy borrowings. While noting that borrowing was not a bad thing in managing an economy as it is cheaper than equity, they said what the debt is being channelled to is the cause of worry in the case of Nigeria. According to them, contrary to the widespread information that money being borrowed is for infrastructure, the larger chunk of the borrowings is going into the government’s recurrent expenditure.

Speaking at a virtual forum organised by Newstide Limited to mark the launch of an online business publication, Prime Business, a non-resident Senior Fellow in peace building and global economic policy at the Global Governance Institute, Brussels, Belgium, Ambassador Ejeviome Otobo, said that while borrowing is not a bad thing, the allocation if borrowed money has been a source of worry for economists. “The first question to ask is what Nigeria is using this debt for? Of course, we would think that it is infrastructure. But that is wrong.

In fact, beginning from towards the end of Jonathan’s regime, we started borrowing to fund recurrent expenditure. “Any country that cannot fund recurrent expenditure from its revenue is in deep trouble. And I think we should not be lured into the complacency of thinking that all of the government debt and the current increases are already used for infrastructure. That is not true. They are largely spent on recurrent expenditure, and I think that’s a very terrible sign,” he said. Also speaking at the forum, a development economist and project finance expert, Dr. Bongo Adi, said the rising debt profile of Nigeria should be a source of worry for all Nigerians. According to him, the rising debt is not good for the economic wellbeing of the country. While noting that the economy had collapsed since 2016 when the slump in oil price pushed the country into a recession, he said the need for recovery also justified borrowings.

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