NECA cautions FG on mounting debt

Nigeria Employers’ Consultative Association (NECA) says Nigeria’s
increasing debt burden could have negative implications on developmental
capacity of the economy.

Director General of NECA, Mr Timothy Olawale

The Director General of NECA, Mr Timothy Olawale, said at a forum on
Tuesday in Lagos that that the debt burden was worrisome and needed to
be checked.

Olawale said that the debt burden was worrisome because about 25 per
cent of the 2019 budget size of N8.8 trillion amounting to N2.140
trillion was going into servicing of debts.

He also said that the Federal Government’s continued borrowing within
the domestic market was limiting the real sector from accessing funding
for expansion and growth.

“’The real sector should be able to access funds which should
ultimately lead to increased employment opportunities within the
economy.

“’Latest figures released by the Debt Management Office (DMO), showed
that government’s domestic debt profile rose to N15.814 trillion in
September, 2018 from N15.629 trillion in June, 2018 (1.19% increase),”
Olawale said.

He said that the amount proposed for debt serving in the 2019 budget
could have a negative effect on the developmental capacity in spite of
government’s financial managers’ argument that the rate of increase was
within a manageable limit.

Olawale cautioned that while the effect of the increasing debt might
not be immediate in totality, it could be catastrophic in the long term
with a chunk of revenue consumed by debt servicing to the detriment of
infrastructure development.

He urged the federal and state governments to take steps aimed at cutting the cost of governance and recurrent expenditure.