With 99% Revenue Going Into Debt Servicing, Nigerian Economy Is Ruined—Tribune Editorial

<h4>With 99&percnt; Revenue Going Into Debt Servicing<&sol;h4>&NewLine;<p><strong><a href&equals;"https&colon;&sol;&sol;openlife&period;ng&sol;">OpenLife Nigeria<&sol;a> <&sol;strong>reports that as signals have emerged that in the days ahead&comma; all sectors in Nigeria would collapse as a result of planned nationwide industrial action by the Nigeria Labour Congress&comma; NLC&comma; Tribune Newspaper editorial of Wednesday&comma; July 26 says with 99 percent of revenue going into debt servicing&comma; Nigerian economy is ruined&period; The editorial is reproduced below<&sol;p>&NewLine;<p><em><strong>NOT even the most optimistic analyst of Nigeria’s dire finances can paper over the cracks&period; The country is in a financial mess and&comma; in the absence of urgent and sincere remedial measures&comma; is going downhill&period;<&sol;strong><&sol;em><&sol;p>&NewLine;<p><em><strong>This is not a cynical prognosis&semi; the country currently expends over 99 percent of its revenue on debt servicing even as inflation takes a heavy toll on the hapless populace&period;<&sol;strong><&sol;em><&sol;p>&NewLine;<p><em><strong>Going by the budget performance report prepared by the Office of the Accountant General of the Federation &lpar;OAGF&rpar; and the Budget Office&comma; out of the N4&period;26 trillion total revenue available for financing the 2022 budget in the first three quarters of last year&comma; a colossal sum of N4&period;23 trillion went into debt financing&period;<&sol;strong><&sol;em><&sol;p>&NewLine;<p><em><strong>That puts the country’s debt service to revenue ratio at 99&period;2 percent&period; According to news reports&comma; the figure is about 10 percentage points higher than the estimated 80&period;6 percent &lpar;covering January to November&rpar; captured in the 2023 budget&period;<&sol;strong><&sol;em><&sol;p>&NewLine;<p><em><strong><a href&equals;"https&colon;&sol;&sol;tribuneonlineng&period;com&sol;">The document showed that the Federal Government had expended N5&period;24 trillion on its debt obligations to local and foreign creditors&period; Actually&comma; the debt service to income ratio was over 100 percent in the first four months of the year&comma; but there was a subsequent adjustment&period;<&sol;a><&sol;strong><&sol;em><&sol;p>&NewLine;<p><em><strong>Truth be told&comma; any economy in which 99 percent of revenue goes into debt servicing can consider itself virtually ruined&period; <&sol;strong><&sol;em><br &sol;>&NewLine;<em><strong>It is a testament to poor leadership which is in itself a reflection of a skewed leadership recruitment process&period; Since the return to civil rule in 1999&comma; successive governments have grappled with Nigeria’s humonguous debt profile&period;<&sol;strong><&sol;em><&sol;p>&NewLine;<p><em><strong>While&comma; to its credit&comma; the Olusegun Obasanjo government succeeded in getting the Paris Club to cancel Nigeria’s debts&comma; subsequent administrations failed to cut the country’s coat according to its cloth&period;<&sol;strong><&sol;em><&sol;p>&NewLine;<p><em><strong>They piled up loans instead of looking inwards&comma; undertaking an overhaul of the revenue base and plugging loopholes&period; <&sol;strong><&sol;em><br &sol;>&NewLine;<em><strong>But if the administrations before him erred&comma; the Muhammadu Buhari administration made error statecraft&period; In the eight years that it held the reins&comma; the administration plunged the country into unprecedented debt peonage&period;<&sol;strong><&sol;em><&sol;p>&NewLine;<p><em><strong>Refusing to cut down on the cost of governance and tap into previously uncharted territory revenue-wise&comma; it made the taking of loans the primary economic policy of government&comma; spending money that the country did not have and scoffing at wise counsel&period;<&sol;strong><&sol;em><&sol;p>&NewLine;<p><em><strong>Surely&comma; the disclosure that Nigeria expended 99&period;2 percent of its revenue on debt servicing for the year 2022 is a confirmation of the decrepit and unsustainable nature of the economic processes available in the country&period;<&sol;strong><&sol;em><&sol;p>&NewLine;<p><em><strong>Just how could any serious country end up using all its revenue to service—not liquidate or pay back– debts&quest; What revenue is left for the running of the country&quest; Worse still&comma; beyond platitudes&comma; nobody can point to what the loans incurred were actually used for&period;<&sol;strong><&sol;em><&sol;p>&NewLine;<p><em><strong>The fact that the country does not have enough revenue to service or pay back its humongous debts suggests clearly that the loans in question were expended on frivolities&period; Or how come there is no infrastructure on account of the loans to ginger production&comma; which would have provided taxes and revenue to repay the debts&quest;<&sol;strong><&sol;em><&sol;p>&NewLine;<p><em><strong>Nigeria is certainly in dire straits with the kind of leadership and elite that would&comma; without shame&comma; run the country aground and leave it in debt peonage&period;<&sol;strong><&sol;em><&sol;p>&NewLine;<p><em><strong>Perhaps with the ineluctable effect of the mismanagement of the economy becoming clearer and imposing deep privations&comma; Nigerians will now rise up to the challenge and duty of monitoring and checkmating the excesses of those who impose themselves on them in the name of government&period;<&sol;strong><&sol;em><&sol;p>&NewLine;<p><em><strong>The time has come for the people to demand a higher level of responsibility and responsiveness from all those in government or aspiring to be in government&period;<&sol;strong><&sol;em><&sol;p>&NewLine;<p><em><strong>The present government must apprehend the enormity of the situation and refrain from continuing with the rapacity of past governments while endeavouring to initiate a new template for governance that will result in massive production in the country&period;<&sol;strong><&sol;em><br &sol;>&NewLine;<em><strong>According to the World Bank&comma; in the absence of radical reforms&comma; the proportion of government revenue going into debt servicing will reach 160 per cent in 2027&period;<&sol;strong><&sol;em><&sol;p>&NewLine;<p><em><strong>That is an apparently disastrous prospect&period; The solution to the debilitating debt situation is the deliberate prioritisation of production and productive activities in the economy&semi; a continuation of the debt spiral can only result in the eventual collapse of the country&period;<&sol;strong><&sol;em><&sol;p>&NewLine;<p><em><strong>The government must encourage production and pursue the diversification of the economy in real terms&period;<&sol;strong><&sol;em><&sol;p>&NewLine;<p>&nbsp&semi;<&sol;p>&NewLine;