The Director General (DG) of the Federal Budget Office, Ben Akabueze, said Nigeria currently has “limited borrowing space” due to its low debt-to-revenue ratio.
The budget office, while addressing elected members of the 10th National Assembly during their week-long introduction ceremony in Abuja on Wednesday, emphasized that if Nigeria remains healthy with debt ratios to gross domestic product (GDP), the country would have no debt ratio.
Akabueze, while addressing newly elected and elected members of Congress, is responsible for reviewing, revising, and approving the federal government’s annual budget as well as economic bills such as currency bills, has warned that “problems” are threatening the federal government. country if it exceeds its limit.
“You may have heard that we have one of the lowest gross domestic product to debt ratios in the world,” he said. Although the size of the FG budget for 2023 has generated some excitement, the total budget for all governments in the country is around N30 billion. That’s 15 percent less in proportion to GDP.
“Even on the African continent, the cost ratio is about 20%. South Africa is about 30%; Morocco is about 40 percent. And 15% is too little for our needs. This is why there is fierce competition for limited resources. “It can determine relatively how much we can borrow. Now we have very limited borrowing space; not because our debt-to-GDP ratio is high, but because our revenue is too low to support the size of our debt. This explains our high debt service ratio. When a country’s repayment rate exceeds 30%, that country is in trouble and we’re headed for 100%, and that tells you how badly we’re in trouble.
“We have limited space to borrow. When you take how much you can generate in terms of income and what you can reasonably borrow, that sets the size of the budget. The next thing will be to pay attention to the government’s priorities as to which projects get what.
According to him, Nigeria should not be classified in the group of oil-rich economies. “We are not even an oil-rich economy. To categorize oil-rich economies, you talk about countries like Saudi Arabia with 34 million people and pumping 10 million barrels of crude per day, or Kuwait with 3 million people and pumping 3 million barrels per day.”, he declared. speak
The DG added that although Nigeria has a population of more than 200 million, “we are currently pumping around 1.9 million barrels per day.”
“So we are not a rich economy and have to resist the temptation to be an oil-rich economy,” he pointed out. Let me make it clear that we are potentially rich countries, but we are not.
Meanwhile, he noted that Nigerians often say the country is not short of development plans but has problems implementing them. “I disagree because a plan that cannot be said to be executed is not a good plan,” he said.
The Budget Office boss pointed out that development plans in Nigeria have been around since the early 1990s, “but you could say it didn’t work out the way it should. The annual budget is the back side of the development plan. They contain goals that are achievable within a year. A budget that falls outside the development plan is not good.