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LCCI predicts additional N15trn borrowing by FG in 3 years

The Lagos Chamber of Commerce and Industry (LCCI) has forecasted that the Federal Government is expected to shoot up Nigeria’s debt by borrowings about N15 trillion between this year and ending of 2024.

 

This is to enable it run the country’s economy without  hitches. The chamber forecast that the funds would come in tranches of N4.893 trillion, N4.750 trillion, and N5.356 trillion in 2022, 2023, and 2024 respectively.

 

It added that it was expecting to see Nigeria’s total debt stock within the range of N39 trillion and N40 trillion by year-end.

 

The LCCI’s projection is in tandem with the Debt Management Office (DMO) projection in the National Development Plan 2021-2025 that indicated that the Federal Government intended to accumulate about N12 trillion debt in two years from 2021 to 2023.

 

President and Chairman of Council, LCCI, Dr. Michael Olawale-Cole, while disclosing this in Lagos, said the country’s debt sustainability was expected to be in the horizon and remain elevated.

 

The LCCI President stated that the rising debt, including servicing was worrisome for the chamber and other members of the organised private sector in the country. Olawale-Cole disclosed that the Federal Government spent N2.89 trillion on debt servicing between January and August 2021.

According to him, this figure represents 74 per cent of the total revenue of N3.93  trillion generated by the federal government within the same period, a development considered to be a dangerous trend for the economy.

The industrialist explained that an overview of the recently passed 2022 budget of N17.13 trillion put the deficit at N6.25 trillion, recurrent and capital expenditure at N6.83 trillion and N5.35 trillion, which represent 41.7 per cent and 32.6 per cent of total expenditure, while 25.7 per cent will be used for debt servicing and repayment of maturing bonds.

 

He added that revenue was projected at N10.13 trillion, $62 oil price per barrel and production of 1.88million barrels per day, and N410/$1 exchange rate is also  projected. “We expect Nigeria’s debt stock and debt-servicing to revenue ratio to remain elevated in 2022.

 

The low yield environment is expected to keep domestic borrowings elevated in the short term as it favours Federal Government in mobilizing funds at lower rates.

 

“Putting all these into consideration, we see total debt stock within the range of N39 trillion and N40 trillion by year-end 2021.

“With projected borrowings of N4.893 trillion, N4.750 trillion, and N5.356 trillion in 2022, 2023, and 2024 respectively, debt sustainability concerns will remain elevated,” the LCCI president said.

 

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