Atiku Abubakar, a former Democratic People’s Party (PDP) presidential candidate, has attacked the federal government over the country’s rising debt.
In his article of Tuesday, June 16, the former vice president advised FG to reduce its expenditures in order to cushion the effects of the country’s high indebtedness.
The medium-term expenditure framework and fiscal strategy of the Federal Ministry of Finance, Budget and National Planning, which shows that Nigeria’s debt-to-revenue ratio was 99% in the first quarter of 2020, was quoted by Atiku, who insisted that debt service is not synonymous with debt repayment.
He also explained that the government led by Buhari had squandered the chances of future generations by leaving them a debt that they neither entered into nor enjoyed.
Atiku called for the sale of aircraft from the presidential fleet, as the country is not on the brink of economic ruin and can still maintain a presidential air fleet that owns more aircraft than the presidential fleets of those from whom Nigeria receives loans. He wrote Nigeria during the financial crisis:
“We rob our children to pay for our greed. Nothing has shocked me more in my entire life in public service than the revelation from Nigeria’s first quarter 2020 financial reports in the Medium Term Expenditure Framework and the Federal Ministry of Finance, Budget and National Planning’s financial strategy, which alarmingly shows that while Nigeria spent a total of £943.12 billion on debt service, the federal government’s retained revenues over the same period were only £950.56 billion.
This means that Nigeria’s debt to income ratio is now 99%. No one should be deceived. This is a crisis! Debt service is not the same as debt repayment.
The reality is that Nigeria only makes the minimum payment to cover our interest costs.
The principle remains untouched and may grow. We’re standing at a precipice. If our revenues do not increase, and quickly, Nigeria risks a situation where our revenues cannot sustain our debt service obligations.
This means that we could become insolvent and our creditors could write us off. In my leading article of December 17, 2019, entitled 'Endless Borrowing Will Lead Nigeria to Endless Sorrowing', I had occasion to advise the federal government to refrain from indiscriminate lending and made suggestions on how both revenue could be increased and expenditure reduced. My advice fell on deaf ears, however.
And now we have come to this. On May 15, 2020, I again advised that the FG should cut the budget of Nigeria by at least 25% to reflect the economic realities of the times in which we live.
Again, my pleas have been set aside.
As part of an administration that has repaid all of Nigeria’s foreign debt, I am concerned about the alarming and avoidable unprecedented increase in our debt to GDP and debt to revenue ratios. The alarm bell that I sounded last year is now ringing louder.
Not only have we missed our opportunities, but we have missed the opportunities of our future generations by leaving them with a debt that they neither entered into nor enjoyed. As a matter of extreme urgency and importance,
I urge the federal government to take immediate steps to drastically reduce its spending, particularly on wasteful projects such as the maintenance of the presidential air fleet and unnecessary renovations of buildings that could remain as they are, the limousine fleet for senior government officials, overseas travel and treatment, and the £4.6 billion budget for the maintenance of presidential villas, etc.
We cannot stand on the brink of economic ruin while we still maintain a presidential air fleet that has more aircraft than the presidential fleets of those from whom we take these loans. Nigeria needs to sell these aircraft and redirect revenue to other vital needs while taking additional steps to reduce the cost of running our government.
The Federal Government cannot continue to justify these unsustainable figures by referring to Nigeria’s debt in relation to GDP.
That’s only half the picture. Our debt-to-earnings ratio paints a much more realistic picture of our financial situation, especially as our income is much lower than that of our competitors.