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By Merit Ibe
The Lagos Chamber of Commerce and Industry (LCCI) has expressed worry over the the ratio of debt service to government’s revenue at about 90 percent, saying it remains alarming and unsustainable.
The Director General of the chamber, Dr Chinyere Almona made the statement following the recent data released by the Debt Management Office (DMO), that the nation’s public debt increased by N6.69 trillion or 22.7 percent to N46.25 trillion ($103.11 billion) as at the end of 2022 from N39.56 trillion ($95.77 billion) at end-2021.
The Chamber therefore, recommended that government must shift focus to equity financing, divestment or shedding of its equity holdings in state-owned enterprises, real estate and infrastructure to reduce its debt commitments and improve its fiscal situation.
She advised that both capital and interest payments on borrowed sums expose the country’s fiscal vulnerabilities and that the government should, as a matter of urgency, emphasize strategies on revenue growth while blocking leakages.
“Importantly, the government may want to consider the need to deregulate the downstream subsector of the oil industry to block a major drain on revenue.”
“Also, following the commendable launch of the restructured Ministry of Finance Incorporated (MOFI) as the arrow head of Nigeria’s efforts to optimize national assets by President Muhammadu Buhari on February 1, 2023, the chamber urged that copious references should henceforth be made to the growth in the stock of financial assets that Nigeria owns in corporate equities, real estate and infrastructure spaces and the returns Nigeria is generating on them, each time the government of Nigeria is providing updates on the growth in the stock of the financial liabilities that Nigeria owes and the costs it is incurring on them, to provide local and global observers a balanced picture of our financial evolution.
“This would motivate national asset managers, led by MOFI, to grow our assets and the returns on them as well as motivate our national liability managers, led by DMO, to minimize our liabilities and the costs we incur on them, with equal vigour. Indeed, issuance of joint reports by MOFI and DMO could be most ideal going forward.
One-sided updates on liabilities with no updates on assets when such updates were adequately available could well be blamed for some of the downgrades of Nigeria’s debt issuance risk profile and outlook.
The rating outcomes would have been more favourable had updates on assets been provided side-by-side with updates about liabilities.”
