When President-elect Asiwaju Bola Ahmed Tinubu takes office on May 29, 2023, he would inherit an N46.25 trillion debt committed by previous administrations, including that of President Muhammadu Buhari, according to Newsmen.
This does not include the N369 billion loan approval the current administration said it had secured from the World Bank to mitigate the effects of the termination of fuel subsidies, which is set to take effect in June 2023.
The Debt Management Office (DMO) reports that throughout the eight years of the Buhari administration, Nigeria’s total stock of debt has reached 46 trillion dollars.
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According to the financial management company, Nigeria’s total debt increased from N12.6 trillion in 2015 to nearly N46 trillion in 2023.
The issue has persisted in causing budgetary concerns, particularly in light of the International Monetary Fund’s (IMF) assertion that Nigeria’s treasury will virtually run dry from debt servicing in 2022.
The Federal Inland Revenue recently reported that it earned N10 trillion in 2022, with a 2023 budget spending of N21.83 trillion estimated to have N11.34 trillion in deficits.
Nigeria is today engulfed in hopelessness by the problems of debt sustainability and economic instability.
After being sworn in on May 29, 2023, Tinubu would be tasked with the difficult task of overcoming the nation’s economic difficulties.
However, there are significant concerns since, according to economic analysts, it would be difficult to restore Nigeria’s debt-ridden economy.
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In an earlier interview, Bongo Adi, a professor of economics at the Lagos Business School, said to reporters that the government of Buhari had mortgaged the future of the nation by accruing significant debt.
Adi told Newsmen that because Buhari has bankrupted the nation, the Nigerian economy will face challenges in the coming days.
However, he asserted that the only practical course of action is for the new administration to request debt renegotiation, which is standard practice elsewhere, assuming the administration has credibility.
“With such a colossal debt burden without apparent means of repayment, the already unsustainable debt profile undermines fiscal sustainability, no matter what the next government will do.
“There is another borrowing spree of $800 million from the Word Bank without how to pay back.
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“They are taking advantage of borrowing to share among themself as they want to exit because they know that nobody would hold them to account.
“There is nothing else to talk about; Nigeria is broke. The coming days are not going to be nice at all. Because if you look at the horizon with this kind of debt, we are not bleeding only from the financial side but all ramifications.
“Medical doctors and professionals of all cadres are leaving, so who will create the money to pay back the loans? The factors that drive economic activities are fast depleting.
“So when they go on accumulating loans, they endanger the lives of everybody. Based on the way it is, today’s situation is better than what we will see in the incoming days. They are handing over a dead economy to Tinubu, and I don’t know which magic he would perform.
“The World Bank’s advice has never helped Nigeria or a developing country. There is nothing they would tell you that will work.
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“The only thing I can tell you is to renegotiate our debts; however, for anyone to listen, there must be credibility. Now will the incoming government assemble credible individuals?
“The most important thing is to give young Nigerians hope to stay in the country, but then you have to stabilize the economy and security. Every country invests in the youth, but that is not the situation in Nigeria, so who would grow the economy? The priority of the coming government should be how to find creative ways to assure the youths of hope in Nigeria,” he stated.
Dr. Ayo Teriba, the chief executive officer of the Economic Associates and a leading economist, stated in his argument that the future administration must learn from President Buhari’s oversight.
He claimed that Buhari’s administration will not make the switch from an income-based debt management model to an asset-based debt management one.
He said that in order to achieve sustainability, the future administration must learn from Buhari’s government’s error and borrow money against assets rather than income, according to News report.
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He claimed that Brazil and India drew foreign direct investment into their nations by acting in this way. Teriba urged Nigerians to back the demand that the next administration concentrate on equity financing rather than debt in order to expand the economy.
“The current administration will be eight years in about five weeks; the error of omission they committed is not transiting from the income-based model of debt management to the asset-based model of debt management.
“They replaced the government that enjoyed an income boom from commodity prices. An annual average oil price per barrel had been way below $100pb, but the Buhari economy faced declining revenue.
“It continued borrowing such that towards the end of the administration, debt cost rose as high as the revenue. It is threatening the fiscal outlook of the country that by the time you pay interest on them, you won’t have anything left.
“The Buhari administration would have changed our borrowing model but did not because they kept hoping the oil price would increase.
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“The incoming government has learnt a lot from the mistakes of Buhari. Going forward, the incoming should borrow against assets, not against income. For example, Saudi Arabia and Malaysia did the same thing.
“I expect the incoming administration will not issue the same instrument as Buhari’s government did.
“Nigeria should move to asset-based borrowing, in the process, unlock revenue for both investors. Nigeria has options: the country is blessed with a lot of assets.
“Instead of issuing debt, equity should be issued; I don’t see why Nigeria cannot attract equity. Nigeria’s prospect of attracting equity is brighter than that of India and Brazil. The clarion call is for Nigerians to support the incoming government to transit to equity issuance. Nigeria’s potential of issuing equity is greater than that of debt”, the financial expert said.
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