.As N2.9trn earmarked for debt servicing
Following the passage of the revised 2020 budget of N10.8 trillion by the Senate on Thursday, a financial expert has cautioned the federal government over the rate of debt service proposed in the budget.
The revised 2020 budget was passed yesterday following a report by Jibrin Barau, chairman of the appropriation committee; which comes a day after the House of Representatives passed the same figure.
Commenting on the budget, with a total sum of N2.9 trillion earmarked for debt servicing, an industry expert, and special assistant technical to the President National Association of Medium and Small Enterprises (NASME), John Chris Mamuda, said the rate at which debt service is going, the entire Country’s budget may be used to service debt.
“When you look at the budget, almost N3 trillion has been budgeted for debt servicing. How much revenue are we making that we’re using so many amounts to service debts?
“Only today, the senate president in his one year anniversary speech said they have approved foreign loans amounting to about $28trn, this is just in a year and it is unprecedented.
“If we continue like this, revenues from the Nigerian National Petroleum Corporation (NNPC), the Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service NCS will all be used to service debts,” he lamented.
He urged the federal government to look inwards especially in the area of borrowing.
According to Mamuda, recent statistics have shown that Nigeria may not be able to pay debts owed to China in the next 30 years, which he described as “A very dangerous situation.”
Speaking further, he stated that it is imperative going forward, for the federal government to reduce borrowing so as to reduce its debt service obligations.
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News Hub Mag! reports that the National Assembly had increased the budget by N300 billion from N10.5 trillion to N10.8trn.
The budget was initially passed in December but it came back to the national assembly after the executive reworked it to reflect the current economic realities.
The COVID-19 pandemic caused the price of crude oil to dwindle thus affecting the major source of the country’s income.
A sum of N500 billion was passed in the budget as an intervention fund for COVID-19. A sum of N186 billion was earmarked for the health sector.
In the revised budget, N422 billion was fixed for statutory transfers, N4.9 trillion for recurrent expenditure and N2.4 trillion is for capital expenditure.
The Senate passed the budget after it dissolved into the committee of supply to approve clauses of the bill. The budget will become operational when President Muhammadu Buhari gives his assent to it.