Babatunde Raji Fashola, Minister of Works and Housing has debunked reports that Nigeria is broke. The minister spoke as fear gripped many Nigerians following a comment by the Minister of Finance, Zainab Ahmed last week that what’s used in servicing the nation’s humungous debt has exceeded revenue accruing to the coffers of the federal government.
Many Nigerians who listened to the minister have expressed concerns that the nation is gradually moving towards a serious economic problem similar to that of Venezuela, and recently Sri Lanka where angry protesters penultimate week sacked the government of President Gotabaya Rajapaksa who has now fled the country.
Zainab last week sounded the alarm bells after she revealed that the country’s debt service cost in the first quarter (Q1) 2022 was N1.94 trillion, N310 billion higher than the actual revenue received during the period.
According to the minister, “The aggregate expenditure for 2022 is estimated at N17.32 trillion, with a pro rata spending target of N5.77 trillion at the end of April.
“The actual spending as of April 30th was N4.72 trillion. Of this amount, N1.94 trillion was for debt service, and N1.26 trillion was for personnel costs, including pensions.
“As at April, N773.63 billion had been spent on capital expenditure. As of April 2022, FGN’s retained revenue was only N1.63 trillion, 49 per cent of the pro rata target of N3.32 trillion.”
The Minister of Finance disclosed these when she unveiled the Medium Expenditure and Fiscal Strategy Paper (MTEF-FSP) in Abuja.
With debt service cost outstripping the country’s revenue, it is a clear indication of dangers ahead and policymakers must be more than willing to implement the much-needed reforms to save the economy, Zainab said.
She affirmed that the federal government’s share of oil revenue was N285.38 billion, representing 39 per cent performance while non-oil tax revenues totalled N632.56 billion — a performance of 84 per cent.
Ahmed also projected that should subsidy end in June 2023, based on the federal government’s earlier timeline, the sum of N3.36 trillion would be required to meet the financial obligations associated with subsidising the product.
Speaking Fashola said, “To the best of my knowledge, Nigeria is not broke. Being indebted and being able to service your debt in conventional finance is not being broke.
“In any event you have to understand that the business of lending itself is a profitable business. So if nobody contracted debts where will all the banks and other financial institutions be? Where will they throw all the people they employ?
“So this is a matter of credit rating and credit reputation. It is this home economics mentality that I cannot take debts that led us to take 12billion dollars cash to go and payoff a debt we could have rescheduled, renegotiated when our infrastructure was dying. That mentality must leave our table.
“All the big nations we want to compete with are contracting debts to build their infrastructure and stand in competition. As long as you can service your debts, you are good.
“I can conveniently tell you that I am not the Nigeria’s minister of Finance; my job is to spend the money not to earn it.
“I am concerned and every responsible Nigerian should have his eyes on the debts and should be concerned,” the minister said.
