19 Days to Go, President Buhari request Senate’s approval for fresh $800m World Bank loan
...Nigeria’s debt profile becoming unsustainable – Budget Office
President Muhammadu Buhari has requested the Senate to approve a fresh $800m loan from the World Bank to enable the administration sustain its social investment programme.
In the letter read at plenary on Wednesday by the President of the Senate, Ahmad Lawan, it was revealed that the approval of the loan would enable federal government continue with the conditional cash transfer window aspect of the programme.
According to him, government would transfer the sum of N5,000 per month to 10.2 million poor and low-income household for a period of six months with a multiplier effect on about 60 million individuals.
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The president said in order to guarantee the credibility of the process, digital transfers would be made directly to beneficiaries’ account and mobile wallets.
“There is the need to request for your consideration and approval to ensure early implementation,” the letter read.
“The Senate, may wish to note that the programme is intended to expand coverage of shock responsive Safety Net support among the poor and vulnerable Nigerians. This will assist them in coping with the costs of meeting basic needs.
“You may wish to note that, the Federal Govemment of Nigeria under the conditional cash transfer window of the programme will transfer the sum of N5,000 per month to 10.2 million poor and low-income household for a period of six months with a multiplier effect on about 60 million individuals.”
Meanwhile, the Director General of the Budget Office of the Federation, Ben Akabueze, has raised the alarm that the nation’s debt profile is becoming unsustainable.
In a lecture titled, “Budget Process and Money Bills,” at the ongoing induction programme organised by the National Assembly Management and the National Institute For Legislative And Democratic Studies for members elect for the 10th National Assembly, Akabueze said that there is limited borrowing space, not because Nigeria’s debt to GDP is high, but because it’s revenue is too small to sustain the size of its debt.
Akabueze said: “We need to be spending about 100 billion dollars annually as a country, including private spending on infrastructure.
“The aggregate budget of the Federal government is only about $30 billion and the aggregate of the states and FCT budget don’t even add up to the federal budget.
“This means that even if we spend every thing, we will still be left with a huge infrastructural deficit.
“That explains our high debt service ratio. Once a country’s debt service ratio exceed 30 percent, that country is in trouble and we are pushing towards 100 percent and that tells you how much trouble we are in.
“We have limited space to borrow. When you take how much you can generate in terms of revenue and what you can reasonably borrow, that establishes the size of the budget. The next thing would be to pay attention to government priority regarding what project gets what.
“You may have heard that we have one of the lowest GDP to debt ratio in the world. While the size of the Federal Goverment budget for 2023 created some excitement, the aggregate budget of all government in the country amount to about N30 trillion.
“That is less than 15 percent in terms of ratio to Gross Domeatic Product. Even on the African continent, the ratio of spending is about 20 per cent.
“South Africa is about 30 percent, Morocco is about 40 percent and at 15 percent, that is too small for our needs. That is why there is a fierce competition for the limited resources. That can determine how much we can relatively borrow.”
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