Nigeria's Mounting Debt: A Call for Investigation and Reform
The Tax Justice and Governance Platform (TJGP), along with other organizations, is raising the alarm about Nigeria’s growing public debt and urging the National Assembly (NASS) to take action.
Their concerns center around the $3.4 billion loan obtained from the International Monetary Fund (IMF) and the broader issue of loan management by the Federal Government across past and present administrations.
They request a thorough investigation into the movement and spending of these loans, emphasizing the need for transparency and accountability in public finances.
Beyond the specific loan, the group paints a worrying picture of Nigeria’s fiscal situation. They highlight a continuous decline in revenue over the past five years, culminating in a projected debt of N107.38 trillion ($138.5 billion) by 2024. This trajectory, they argue, poses a significant threat to the well-being of Nigerians.
Their concerns are multifaceted:
- High-cost private creditors: They point out that 37% of the debt is owed to private creditors with short repayment periods and high-interest rates (6-9%) compared to loans from multilateral institutions (1-3% and 10-30 year repayment). This raises concerns about the long-term sustainability of the debt.
- Debt servicing burden: They warn that debt servicing will consume 98% of the 2024 budget, leaving limited resources for crucial investments in education, healthcare, and infrastructure. This could lead to increased poverty and unemployment (23 million additional Nigerians in poverty and 80 million without full-time jobs by 2030 according to their estimates).
The group proposes several solutions:
- Reform borrowing practices: They advocate for stopping borrowing for non-productive expenditures and focusing on projects that directly impact economic growth and development.
- Reassess spending and revenue generation: They urge the government to reassess its spending priorities and explore ways to increase revenue through a harmonized and more efficient tax system.
- Legislative reforms: They call for revising the Fiscal Responsibility Act 2007 to ensure borrowing is justified by clear criteria and to establish a tax committee empowered to approve double tax agreements and monitor existing tax treaties.
- Prioritizing social spending: They urge the government to prioritize spending on essential services like education, healthcare, and social safety nets, especially for low-income earners.
- Addressing the energy crisis: They call for fixing the power and transport sectors to reduce reliance on expensive generators and fuels, ultimately alleviating the burden on ordinary citizens.
The group emphasizes the urgency of these reforms, arguing that “failure to act quickly will have profound implications for the well-being of Nigerians.” They particularly appeal to NASS members from Rivers State to mobilize support for their recommendations and represent the interests of their constituents.
This issue highlights the complex challenges faced by Nigeria in managing its public finances. Balancing debt sustainability, efficient resource allocation, and the needs of the population requires a multi-pronged approach involving responsible borrowing, improved revenue generation, and strategic investments in critical sectors. The success of such efforts will determine the future economic stability and well-being of Nigerians.
Source: Gazette NG