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The Lagos Chamber of Commerce and Industry (LCCI) has advised the federal government to keenly manage its borrowing appetite since the nation’s weak economic fundamentals may not be able to support fresh borrowings, at this time.
The Chamber, in a statement, tagged: ‘LCCI Statement on FG’s Fresh $2.2billion Borrowing Plan’, issued by its Director General, Dr. Chinyere Almona, over the weekend, hinged its concerns, over a fresh external loan, on the lack of understanding of how such funds would be used.
“With an estimated debt-to-GDP ratio of above 50%, our debt servicing expenses set to swallow our capital expenditure, and Nigeria owing about $17billion and the 3rd highest debtor to the International Development Agency (IDA), the LCCI is taking the responsibility to once again warn about imminent debt sustainability issues and how that may further weaken the state of critical infrastructure in the country, ” it stated.
The Chamber tasked the managers of the nation’s economy to explore other options for budget deficit, rather than solely using debt financing.
It warned that the nation could lose steam on infrastructure financing; since debt servicing alone might rise above the 2025 Capital expenditure allocation, in the budget.
The body also expressed concerns over the exposure to the external currency shocks that might result from the depreciation of the Naira against the Dollar in the course of servicing the accumulated debts.
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LCCI therefore called on the federal government to ensure transparency and accountability in deploying the borrowed funds.
It also believed the funding of critical business-supporting infrastructure, such as: electricity supply, security for food production and logistics, and other enablers of manufacturing should be given utmost priority by the federal government.
“Beyond borrowing, the Federal Government should intensify efforts to expand the non-oil revenue base through tax reforms, improved compliance, and the promotion of export-driven sectors like agriculture and manufacturing,” the business advocacy group added.
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