The Lagos Chamber of Commerce and Industry (LCCI) has called on the federal government to adopt measures to increase the country’s revenue and borrow from cheaper sources to cushion Nigeria’s debt portfolio.
The President of the chamber, Michael Olawale-Cole, gave the advice in a statement on Monday in Lagos.
Mr Olawale-Cole said the advice had become necessary because the country’s rising debt stock was becoming increasingly problematic in the face of dwindling revenue and the unsustainable burden of subsidy payments.
He said that most recent statistics on government revenues showed poor performance and mounting government costs, making it evident that Nigeria was going through a debt crisis.
He noted that aggregate expenditure for 2022 was estimated at N17.32 trillion; at the end of April, a revenue of N5.77 trillion was expected but only N1.63 trillion was realised as government’s retained revenue.
Mr Olawale-Cole added that within the same period, government’s actual spending stood at N4.72 trillion; N1.94 trillion on debt servicing, N1.26 trillion on personnel costs, leaving only N773.63 billion for capital expenditure.
He further said that the country’s total public debt stock rose from N39.56 trillion in December 2021 to N41.60 trillion by the end of the second quarter of 2022, as revealed by the Debt Management Office (DMO).
Noting that the borrowings were significantly increasing, he said Nigeria is struggling to service these debts due to revenue mobilisation challenges and an increased fuel subsidy burden.
These developments, the LCCI President said, were disturbing seeing that debt servicing alone was higher than actual retained revenue in the first four months of this year.
“There are already concerns that most, if not all, of the assumptions in the Medium-Term Expenditure Framework (MTEF) 2023-2025 will be missed as we continue to experience unprecedented levels of disruptions to supply chains and agricultural production.
“The 2022 budget assumptions have already fallen short in terms of inflation, exchange rate, and GDP growth rate and all of these assumptions have become inadequate.
“Nigeria’s Debt-to-GDP ratio now stands at 23.27 per cent, as against 22.43 per cent on Dec. 31, 2021.
“On the path of caution, we urge the Federal Government to discontinue this unsustainable pattern,” he said.