This is according to a new economic report published by the Centre for the Promotion of Private Enterprise (CPPE).
The new report which was a review of Nigeria’s economic performance for first quarter of 2022 noted that borrowings from the Central Bank of Nigeria (CBN) was yet to be added to the debt stock reported by DMO.
The Chief Executive Officer, CPPE, Dr. Muda Yusuf at the event also called on the Nigerian Government to stop taking commercial loans.
He argued that it was better Nigeria took loans from the World Bank, IMF and other institutions as they were cheaper.
In his words: “The rising debt profile of government raises serious sustainability concerns.
“However, when we take account of borrowings from the CBN and the stock of AMCON debt, the debt profile would be in excess of N50tn.
“Although government tends to argue that Nigeria does not have a debt problem, the country has a revenue challenge.
“And this would typically become a problem if the revenue base was not strong enough to service it sustainably.
“Government’s actual revenue could hardly cover recurrent budget, which implies that the entire capital budget and part of recurrent budget are being funded from borrowing which is not sustainable”, he said.
“We cannot continue to increase borrowing on account of the relatively low debt/GDP ratio.
Read also: Nigeria used borrowings as tool for economic recovery – DMO
“We do not service debt with GDP, but with revenue. Close to 40 per cent of our GDP do not contribute appreciably to revenue.”
Yusuf said government should have the political will to cut expenditure and undertake reforms that could scale down the size of government, reduce governance cost, and ease the fiscal burden on government and boost revenue.
“It is important to ensure that the debt is used strictly to fund capital projects, especially infrastructure projects, that would strengthen the productive capacity of the economy,” he said.