Members of the Progressives Governors’ Forum will soon meet on the Federal Government’s declaration that the country can no longer take loans to finance its budget.
The Director-General of the forum, Mallam Salihu Lukman, stated this in a telephone interview with one of our correspondents on Wednesday, while reacting to a statement credited to the Minister of Finance, Mrs. Kemi Adeosun, that the nation could no longer borrow from external creditors and that local sources of raising funds must be explored.
Lukman, who declined to give the specific day the governors would discuss the issue, said they would meet in the next few days.
The PGF is the umbrella body of governors elected on the platform of the All Progressives Congress.
Responding to an enquiry, Lukman stated, “In the next few days, I am sure we will meet and have an official position, which we will make public.”
Adeosun had said Nigeria could no longer afford to seek foreign loans but generate funds domestically to fund the budget at the quarterly business forum held at the Banquet Hall of the Presidential Villa in Abuja on Tuesday.
“We cannot borrow anymore, we just have to generate funds domestically to fund our budget and mobilise revenue to fund the necessary budget increase,” she had said.
The country had incurred $4.8bn foreign loans in the last two years. It had also borrowed N3.57tn to finance the budget deficit in the last 21 months.
The Chairman of the Peoples Democratic Party Governors, Ayodele Fayose of Ekiti State, said that it was unfortunate that the Federal Government had decided that the nation could no longer borrow money.
“It is sad that we can no longer borrow to finance our budgets and other things. It is that bad,” he said.
Economic and financial experts, who spoke with one of our correspondents in separate interviews on Wednesday said the nation was already spending so much to service debts, stressing the need to shore up government revenue.
The Board Chairman, Nigerian Economic Summit Group, a private sector think tank and policy advocacy group, Mr. Kyari Bukar, said the NESG had issued a paper a few months ago on the level of debt servicing in the country.
He said, “If you look at the level of borrowing today, both domestic and foreign combined, you will see that the servicing of the debts is becoming too cumbersome. So, you have to do one of two things. One, you increase the revenue you are getting, which I think the minister (of finance) has done quite cleverly through the Voluntary Asset and Income Declaration Scheme.”
“The second thing is belt-tightening on the part of the government, because the spending has to be done wisely; there has to be some level of trimming of both overheads and even salaries.”
He said with the VAIDS, the country could see additional tax revenue of N500bn to N3tn on an annual basis.
The Managing Director, Cowry Asset Management Limited, Mr. Johnson Chukwu, said the government had already over leveraged, adding that the nation’s debt had increased by about N7tn in the last two years.
“The government has borrowed more than $4bn in the past two years. Today, the debt service to revenue of the government is about 54 per cent; so clearly, there is no headroom for additional borrowing. The country should not be measuring its debt sustainability based on the Gross Domestic Product; it has to be based on revenue, and our revenue is not as strong as our GDP,” he stated.