A former federal minister and frontline civil advocate, Dr. Oby Ezekwesili, has advised the Federal Government to suspend its plan to raise $2.8 billion in Eurobond to fund the 2018 budget.
She gave the advice while reacting to the Minister of Finance, Hajia Zainab Ahmed, who on Sunday said that the government would soon float the bond.
The minister had during the rounding off of the annual International Monetary Fund (IMF) meeting in Bali, Indonesia, said that said that government was exploring the bond option to fund capital projects in the budget.
She explained: “The upcoming bonds that we are trying to raise will be within the 2018 budget framework and with approved targets. So, we are not going beyond what was approved in the budget.
“The budget has approved for us to borrow both locally and internationally and we have a bond issuance with the range of 2.8 billion dollars that we need to raise before the year closes out.
“The bond will be used to fund capital projects in the 2018 budgets”, Ahmed clarified.
The minister pointed out that Nigeria had more legroom for borrowings since its total debt stock was just three per cent of the GDP.
Reacting to the minister’s comments during an interactive session with journalists in Lagos, Ezekwesili said the plan to borrow more could hurt the economy.
The former Vice-President (Africa) of World Bank, argued that the country currently spent 69 percent of its revenue on servicing both local and international debts, adding that borrowing more is not a desirable step as the country is not generating adequate revenue to fund its critical development needs.
She explained: “What, in my view, the plan to float the bond portends for the economy is that the Federal Government is digging in instead of digging out. Already, the debt service to revenue is so high. Today it is 69 per cent. 69 per cent of revenue is used to service our debts.
“That is not a sustainable situation. I see the government quote all the time `Debt to GDP ratio’, but that is like a blunt instrument in an environment where your GDP is not reflective of your productivity.
“We measure your productivity by the revenue the GDP generates in the form of revenue of government that comes as a result of the GDP.
“Your debt to GDP is three percent and you think that gives you the legroom to borrow and borrow. No, that is not your instrument. Your instrument is your debt service tool, which is the revenue”, the finance expert added.
Ezekwesili urged the government to explore innovative ways of increasing the nation’s revenue rather than borrowing more to avoid plunging the country to insolvency someday.
Specifically, she advised the government to diversify revenue sources and pursue deep sector and structural reforms to enhance the productivity and competitiveness of the economy.
This is even as she canvassed the need for government to prioritise its needs and deploy limited resources only in those areas with massive impact on development.
