By Bimbola Oyesola

Organised Private Sector (OPS) has warned that the rising  debt profile of government raises serious sustainability concerns.

In a separate reactions to the Senate approval for external loans to finance the 2021 budget, immediate past Director General of Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, and the Nigeria Employers Consultative Association (NECA) said the consistent debt accumulation by the federal government calls for grave concerns, as it puts heavy burden on businesses.

According to NECA, no economy can survive and provide adequately and achieve its developmental programmes by servicing debt with almost 98 per cent of its revenue.  The former LCCI boss stated that debt becomes a problem if the revenue base is not strong enough to service the debt sustainably. 

“It invariably becomes a debt problem,” he said.  

He however noted that the request is part of the borrowing plan to finance the deficit in the 2021 budget. 

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“The plan has been approved by the National Assembly,  both in the Medium Term Expenditure Framework (MTEF) and the 2021 Appropriation Act.  It is not an entirely new proposition,” he said.  

The former LCCI Director General opined that what is needed is 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.

He adde: “It is important to ensure that the debt is used strictly to fund capital projects that would strengthen the productive capacity of the economy.  This is position of the Fiscal Responsibility Act.

“Additionally,  emphasis should be on concessionary financing,  as opposed to commercial debts which are typically very costly.”

The employers body, NECA, stated that while the provision for the N2.3trillion external borrowing was provided in the 2021 Appropriation Act, it warned that the  growing debt profile of the country in such a situation always put a heavy burden on Businesses/Enterprises that lays the golden egg as every agencies of government will demand its pounds of flesh, therefore, wears it out. The Director General of NECA, Timothy Olawale, stated that OPS has in time past clamour for a policy rejuvenation to salvage a situation like this, by diversifying the revenue away from oil sales, while enhancing the promotion of processed agriculture exports.