- Economists have sent a clear message to the federal government on Nigeria's growing debt
- The FG has continuously defended its decision to borrow to meet the financing needs of the country
- However, Bismarck Rewane and Ndubuisi Ekekwe argued that the country is in a serious debt crisis and will soon run out of cash in months
Bismarck Rewane, chief executive officer of Financial Derivatives Company Limited and Ndubuisi Ekekwe, the Chairman of FASMICRO Group, have raised concerns about Nigeria's debt level.
They kicked against the Federal Government’s proclivity for debt, which they have described as unsustainable.
Comments from Rewane
In a telephone chat with Legit.ng, Rewane warned that Nigeria is moving towards high debt distress risk but allayed fear that debt is not sustainable.
PAY ATTENTION: Share your outstanding story with our editors! Please reach us through firstname.lastname@example.org!
According to him, the federal government’s debt service costs surpassed its revenue, pushing the fiscal deficit to N3.09 trillion in the first four months of 2022.
"The estimated debt service for the four-month period was N1.2 trillion, which was 37% less than the actual amount spent on debt servicing, while the actual revenue was N3.3 trillion, which was 103.7% less than the predicted amount."
"This is the first time the country’s debt service-to revenue ratio will exceed 100 percent. This signals a debt management problem.”
Nigeria running out of cash in five Months
For Ndubuisi Ekekwe Nigerian economy is in tougher challenges than debt crises.
According to him, Nigeria is now at the risk of running out of cash in five months.
Citing the Premium Times report, he noted that Nigeria's external reserves are down to $15 billion contrary to CBN’s $36 billion claim.
"Evidence is growing that the economy is facing a double whammy: an empty treasury and swift decline as Nigeria gets ready for general elections that promise to be among the most hotly contested in its history."
"The governor of the Central Bank of Nigeria, Godwin Emefiele, was alerted by an elected official to the fact that Nigeria's external reserves are only $15 billion, far less than the $36 billion balance on the gross external reserves claimed by the bank, which has raised concerns in Abuja and Lagos, according to government officials and business leaders with knowledge of the situation."
He also told Legit.ng that regardless of the preferred exchange rate, the nation spent N5.9 trillion on imports in the first quarter of the year, so $15 billion in reserves would hardly be enough to sustain that amount of spending.
Petroleum minister reveals Buhari's position on the removal of petrol subsidy
Earlier, Legit.ng reported that the minister of state for petroleum, Sylva, reacted to reports of President Buhari's plan to remove the subsidy on petrol.
Sylva revealed that Buhari is not in support of the removal of subsidy on petrol at this time.
According to him, the complete removal of subsidy is not on the federal government's plate, saying they plan to complete consultations before coming out with a clear policy direction on the matter.