Reactions have begun to trail President Muhammadu Buhari’s demand for N2.3tn ($6.18bn) external loan approval from the Senate to fund part of the 2021 N13.8trn national budget.
Techeconomy.ng reported that President Buhari’s demand was contained in a letter addressed to the Senate President, Ahmad Lawan read at plenary on Tuesday, May 18.
Reacting to the letter, the Abuja Chamber of Commerce and Industry and the Lagos Chamber of Commerce and Industry both raised concerns over the rising debt profile of Nigeria following Buhari’s request that the Senate should approve another N2.3tn external loan.
The President, ACCI, Al-Mujtaba Abubakar, said the chamber was aware of the government’s plan to fund the deficit in the 2021 budget.
Abubakar said: “We, however, urge the Federal Government to take judicious note of the negative side of excessive borrowing, especially on interest payment among others.
“We particularly called attention to the already high debt service rate and its attendant depletion of revenue earnings.
“We once again call on the Federal Government to minimise borrowing and focus more on cutting the cost of governance.
“If this is not done, debt service may soon further cripple the economy and dampen any hope of higher GDP growth.
“When other economic indices are considered, it is clear the administration needs to urgently embark on cost chatting measures before it is too late.”
On his part, the Director-General, LCCI, Muda Yusuf, said although the request was not an entirely new proposition, the government should be cautious of growing the country’s debt profile.
Yusuf said: “The rising debt profile of government raises serious sustainability concerns. Although government tends to argue that the condition is not a debt problem, but a revenue challenge.
“But the truth is that debt becomes a problem if the revenue base is not strong enough to service the debt sustainably. It invariably becomes a debt problem.”
“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.”
Yusuf added that it was important to ensure that the debt was used strictly to fund capital projects that would strengthen the productive capacity of the economy.