From Amechi Ogbonna, Washington DC
Amidst growing concerns by the World Bank and the International Monetary Fund (IMF)that Nigeria’s debt profile is soaring to very unsustainable levels, Finance Minister, Kemi Adeosun, yesterday gave reasons why the Federal Government would continue to borrow in the face of dwindling crude oil revenue to keep the wheel of the economy running.
The Minister who spoke at a wrap up session of the just-concluded annual meetings of the World Bank and the IMF in Washington DC on Sunday, said suspending the government’s borrowing programmes would only lead to loss of jobs, stagnation in infrastructure investments and closure of many businesses.
Adeosun said the Muhammadu Buhari -administration inherited an economy where about 27 out of 36 states were not paying salaries due to the over 70 per cent drop in crude oil revenue and decided not to leave the situation to degenerate further.
She said it was in an effort to keep the economy running and halt the mass sack of workers in both the private and public sectors of the economy that government embarked on the borrowing spree recorded over the last two years.
Recall that recent statistics from the Debt Management Office had put the nation’s total foreign and domestic debt at N19.16trillion from about N17.36trillion in 2015, which forced the IMF to warn the nation’s indebtedness could hit 24.1per cent of GDP by 2018 and 23.3 per of GDP by end of this year.
She said “Why are we borrowing. If you think back to the problem we faced when the present government came on board, you would notice that our principal source of revenue plummeted by up to 85 per cent, so we had no choices. You either cut public infrastructure massively,which should have led to massive job losses or you borrow in the short-term, until you begin to generate revenue.
We felt that laying off thousands of persons was not the best way to stimulate growth. Also,when we came into office, about 27 states could not pay salary. If we had allowed that situation to persist, we would have been in depression by now. So, we took the view as a government that the best thing to do was to stimulate growth and spend our way out of trouble, get the state governments to pay salaries, make sure Federal Government pays and invests in capital infrastructure. Once growth is restored, you begin to systematically reduce your dependence on borrowing. Now, we are talking about tax and what we are saying is that people should be aware of their responsibilities to their nation.”