Nigeria President-elect, Asiwaju Bola Ahmed Tinubu, will inherit N46.25 trillion debt incurred by past administrations including that of President Muhammadu Buhari government when he is sworn in on May 29, 2023.
This excludes the N369 billion loan approval the incumbent government said it had received from the World Bank to cushion the effect of fuel subsidy removal scheduled for implementation in June 2023.
Reports according to the Debt Management Office (DMO) show that Nigeria’s total debt stock has hit 46 trillion in the eight years of the Buhari administration.
The financial management organization revealed that Nigeria’s debt profile had grown from N12.6 trillion in 2015 to over N46 trillion in 2023.
The situation has continued to raise fiscal worries, especially as the International Monetary Fund, IMF, said Nigeria almost emptied its treasury on debt servicing in 2022.
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Recently, the Federal Inland Revenue said it collected N10 trillion in revenue in 2022, with a 2023 budget expenditure of N21.83 trillion pegged on deficits of N11.34 trillion.
The issue of debt sustainability and economic instability currently chokes Nigeria without hope.
On this ground, the onerous task of surmounting the country’s economic challenges would be shouldered by Tinubu after his swearing-in on May 29, 2023.
There are, however, great concerns as economic experts said fixing Nigeria’s debt-burdened economy would be a hard nut to crack.
During an interview earlier, a Professor of Economics at Lagos Business School, Bongo Adi, told reporters that the debt incurred by Buhari’s government had mortgaged the future of the country through heavy obligations.
Adi told Daily Post that in the coming days, it will be difficult for the Nigerian economy because Buhari has left the country broke.
However, he suggested that the only viable option is for the incoming government to seek loan renegotiation, as it is the practice internationally, provided the government has credibility.
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“With such a colossal debt burden without apparent means of repayment, the already unsustainable debt profile undermines fiscal sustainability, no matter what the next government will do.
“There is another borrowing spree of $800 million from the Word Bank without how to pay back.
“They are taking advantage of borrowing to share among themself as they want to exit because they know that nobody would hold them to account.
“There is nothing else to talk about; Nigeria is broke. The coming days are not going to be nice at all. Because if you look at the horizon with this kind of debt, we are not bleeding only from the financial side but all ramifications.
“Medical doctors and professionals of all cadres are leaving, so who will create the money to pay back the loans? The factors that drive economic activities are fast depleting.
“So when they go on accumulating loans, they endanger the lives of everybody. Based on the way it is, today’s situation is better than what we will see in the incoming days. They are handing over a dead economy to Tinubu, and I don’t know which magic he would perform.
“The World Bank’s advice has never helped Nigeria or a developing country. There is nothing they would tell you that will work.
“The only thing I can tell you is to renegotiate our debts; however, for anyone to listen, there must be credibility. Now will the incoming government assemble credible individuals?
“The most important thing is to give young Nigerians hope to stay in the country, but then you have to stabilize the economy and security. Every country invests in the youth, but that is not the situation in Nigeria, so who would grow the economy? The priority of the coming government should be how to find creative ways to assure the youths of hope in Nigeria,” he stated.
Tinubu Must Learn From Buhari’s Mistakes
In his submission, while reacting to the country’s economic status, an economic expert and the Chief Executive Officer of the Economic Associates, Dr Ayo Teriba, said the incoming administration must learn from President Buhari’s error.
According to him, Buhari’s government was not to transition from income-based debt management into an asset-based debt management model.
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He disclosed that to ensure sustainability, the incoming government must learn from the mistake of Buhari’s government by borrowing against assets, not income, Naija News reports.
He said this was what Brazil and India did that attracted Foreign Direct investment into their countries. Teriba called on Nigerians to support the call for the incoming government to focus on equity financing rather than debt to grow the economy.
“The current administration will be eight years in about five weeks; the error of omission they committed is not transiting from the income-based model of debt management to the asset-based model of debt management.
“They replaced the government that enjoyed an income boom from commodity prices. An annual average oil price per barrel had been way below $100pb, but the Buhari economy faced declining revenue.
“It continued borrowing such that towards the end of the administration, debt cost rose as high as the revenue. It is threatening the fiscal outlook of the country that by the time you pay interest on them, you won’t have anything left.
“The Buhari administration would have changed our borrowing model but did not because they kept hoping the oil price would increase.
“The incoming government has learnt a lot from the mistakes of Buhari. Going forward, the incoming should borrow against assets, not against income. For example, Saudi Arabia and Malaysia did the same thing.
“I expect the incoming administration will not issue the same instrument as Buhari’s government did.
“Nigeria should move to asset-based borrowing, in the process, unlock revenue for both investors. Nigeria has options: the country is blessed with a lot of assets.