LCCI warns FG against excessive borrowing The Lagos Chamber of Commerce and Industry has cautioned the Federal Government against borrowing on the strength of the nation’s rebased Gross Domestic Product. The National Bureau of Statistics had in April, 2014 rebased Nigeria’s GDP to better reflect the country’s changing economic configuration. The subsequent recalculation put the country’s GDP at $510bn and boosted the size of the economy by over 60 per cent, making it the 26th largest in the world. In its annual growth projection, the World Bank declared that Nigeria’s economy had seen expansion to 4.5 per cent from 4.2 percent in 2014. The apex bank had also projected that Africa’s GDP would grow by 5.2 per cent yearly between 2015 and 2016. However, the bank on January 20, in its World Economic Outlook, lowered Nigeria’s growth outlook to 4.8 per cent from 7.3 per cent estimated in October, 2014 due to falling oil prices. Meanwhile, the President, LCCI, Mr. Remi Bello, in a statement, cautioned the Federal Government against relating debt to the rebased GDP. He noted that a large component of the rebased GDP was not revenue- generating. He observed that there was a disturbing trend with the debt provision in the 2015 budget as the figure had risen to N943billion from the 2014 allocation of N712billion. While reviewing the country’s debt portfolio in the 2015 budget, the LCCI boss said about 25 per cent of the nation’s revenue would be used for debt servicing this year. He said what was more disturbing was that the debts were not incurred for developmental purposes. “As a percentage of revenue, the debt service provision is over 25 per cent. As a percentage of infrastructure budget, it is 906 per cent; as a percentage of capital budget, it is 148 per cent. The trouble is that the bulk of the debts (mainly domestic) stemmed from recurrent spending. They were not incurred for developmental purposes. This makes the servicing even more burdensome on the economy and the citizens. “We would like to caution once more to avoid relating debt to the re-based GDP in determining borrowing on the nation’s threshold. This is because a large component of the rebased GDP is not revenue generating. If the current trend of debt accumulation continues, it is only a matter of time for debt service provision to completely crowd out capital expenditure in the budget.” A professor of Economics at Olabisi Onabanjo University, Sheriffdeen Tella, shared the chambers’ concern. He said though the bulk of the debt provision in the budget was internal, which meant the money was still coming back to the economy, a situation where a large chunk of the debt went to recurrent expenditure instead of capital was not good for the economy. He supported the notion that the government should strike out unnecessary expenses from the budget. Bello said the personnel cost which had risen from N1, 727bn in 2014 to N1, 836bn in the 2015 budget represented an increase of 6.3 per cent. He noted that this was controversial especially since the government had carefully spelt out austerity measures to cushion the impact of the global oil slump on the economy. On his part, Tella flayed the rising cost of personnel. “This has always been the problem with the Nigerian budget. If you notice, the bulk of the money is not spent on the economy or on paying salaries of civil servants, rather it is spent on corruption. The politicians use the money to settle themselves,” he said. Copyright PUNCH.All rights reserved. This material, and other digital content on this website, may not be reproduced, published, broadcast, rewritten or redistributed in whole or in part without prior express written permission from PUNCH. Contact: editor@punchng ift.tt/1BNmARb ift.tt/1vkk4hd [[Boost your social presence with NAIRALIKES nairalikes ]] #nigeria x #nairalikes #vanguardng
Posted on: Fri, 23 Jan 2015 00:29:57 +0000
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