The Director-General of the Budget Office, Ben Akabueze has warned of imminent danger should the government fail to stop its borrowing spree.
Akabueze said the country’s debt to revenue ratio is not looking too good.
Hence, he said the country has limited space for borrowing.
But President Muhammadu Buhari would not want to hear this as he wrote to the National Assembly seeking approval for a fresh $800m loan from the World Bank.
Buhari who is currently in London attending to his tooth will be leaving office May 29 2023.
Budget DG who was speaking to the newly elected and returning members of the National Assembly,at their week-long induction ceremony in Abuja, however said that the country debt to Gross Domestic Product still look good despite the indebtedness of the country.
He said, “You may have heard that we have one of the lowest Gross Domestic Products-to-debt ratios in the world. While the size of the FG budget for 2023 created some excitement, the aggregate budget of all the governments in the country amounted to about N30tn. That is less than 15 per cent in terms of ratio to GDP.
“Even on the African continent, the ratio of spending is about 20 per cent. South Africa is about 30 per cent; Morocco is about 40 per cent. And at 15 per cent, that is too small for our needs. That is why there is fierce competition for the limited resources.
“That can determine how much we can relatively borrow. We now have very limited borrowing space; not because our debt to GDP is high, but because our revenue is too small to sustain the size of our debt. That explains our high debt service ratio. Once a country’s debt service ratio exceeds 30 per cent, that country is in trouble and we are pushing towards 100 per cent, 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 the government’s priority regarding what project gets what.”