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Former deputy governor of Central Bank of Nigeria (CBN),Prof.Kingsley Moghalu,says the government has mortgaged the future of the youths with massive borrowing.
He said Nigeria is on a dangerous, debt-induced fiscal terrain, adding that the government is mortgaging the future of the country’s youth.
According to him,the rate at which Nigeria’s public debt has increased in the last six years is unprecedented, alarming, and unsustainable.
He said:“We have to stop further borrowing and start to manage the current obligations in order to avoid a sovereign debt default or, at best, a costly restructuring. Further borrowing will lead to a disastrous debt bubble bust.From $10.31 billion at the end of June 2015, the total external debt increased to $32.85 billion at the end of March 2021, which represents a 218 percent increase, and the total outstanding public debt stock increased by 173 percent in the same period, from N12.11 trillion to N33.10 trillion. On the average, over N3.6 trillion is being added to the public debt annually.
He maintained that the massive borrowing, and the infrastructure investment that has been used to justify it, have grossly under-performed, pointing out that instead of delivering economic growth, the economy has been twice in recession, and when out of it, growth has been underwhelming at two percent at best.
“Rather than the debt-funded infrastructure projects creating ample numbers of jobs for the citizens, the national unemployment rate has increased to 33.1 percent while youth unemployment has reached 42.5 percent. Under a scenario of a coordinated economic policy by a competent government, the debt capital outlay would have catalyzed private sector investments and sizable foreign direct investment (FDI) flows into the economy,” Moghalu said.
He added, “Public-private partnerships should be the dominant approach to infrastructure development in a country like Nigeria, instead of contract awards that, from information available from comparable projects in countries such as Ghana and Ethiopia, are at best overvalued and, at worst, grossly inflated in their costs. But in the real situation of the incompetence of the government in the last six years, businesses have been groaning and FDI inflows have decreased.”
Moghalu said that over the past months, debt service cost has taken up more than 90 percent of government revenue.
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