Abuja, May 11, 2023 – Ben Akabueze, the Director General of the Budget Office of the Federation, says the country is borrowing more than its capacity to repay.
Akabueze, who was speaking at the induction of the lawmakers-elect in Abuja, said the country was fast exceeding its limited borrowing space.
He said the country had one of the lowest Gross Domestic Product (GDP) to debt ratio in the world.
“That is why there is a fierce competition for the limited resources that can determine how much we can relatively borrow.
“We now have very limited borrowing space, not because our debt to GDP is high, but because our revenue is too small to sustain the size of our debt. That explains our high debt service ratio.
“Once a country’s debt service ratio exceeds 30 percent, that country is in trouble and we are pushing towards 100 percent and that tells you how much trouble we are in.
We have limited space to borrow.
“When you take how much you can generate in terms of revenue and what you can reasonably borrow, that establishes the size of the budget.
“The next thing would be to pay attention to government priority regarding what project gets what. The budget is not a shopping list. In the least, the budget only contains expenditure.”
Akabueze said that there was a problem with the nation’s budgeting system, stressing that Nigeria had no organic budget law.
“The Federal Government of Nigeria does not have an organic budget law.
“It is really unfortunate that we don’t have an organic budget law. Hopefully, there is one in the work in the 9th Assembly and may be passed before the Assembly winds up.
“I don’t know any serious country in the world that does not have an organic budget law.
“Each country has to determine its budget system that works for it. Budget is multi-dimensional in coverage.
“One, it is political because it allocates scarce resources of the country among multiple competing and sometimes, conflicting, interests.
“It is also an economic document because it helps as the primary fiscal instrument for stimulating economic growth, ensuring employment and maintaining economic stability.
“It is an accounting document and provides a ceiling and is legally binding for the government to operate.
“It is also a moral document. You can know what a country cherishes by looking at its budget document.” (GBN)
