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LCCI To FG: Re-assess debt sources to reduce costs

Following the high amount being gulped by debt servicing, the Lagos Chamber of Commerce and Industry (LCCI) has advised the Federal Government to reassess its sources of borrowing in order to cut cost. Currently, it will cost the country about N3.61 trillion to service the debt being owed. LCCI disclosed that it’s time the country began to borrow at lower rates or possibly access non-interest loans like Sukuk in order to reduce the debt burden payments in the long term.

The President and Chairman of Council, Lagos Chamber of Commerce & Industry (LCCI), Dr. Michael Olawale-Cole, who made this known in a chat in Lagos, said that government needed to watch the rising recurrent (especially personnel) expenditure in the country by keying into cost reflective zero interest loans in order to save the country’s GDP growth.

Olawale-Cole explained that a look at 2022 aggregate FGN Expenditure of N17.13 trillion, recurrent (non-debt) spending is estimated at N6.91 trillion, which is 40 per cent of total expenditure and 20 per cent higher than the 2021 budget. He added that the capital expenditure of N5.96 trillion was 35 per cent of total expenditure, while the debt service provision of N3.61 trillion is 21 per cent of total expenditure and 34 per cent of total revenues.

He said: “This leaves us with a deficit of N6.39 trillion, representing 3.46 per cent of our GDP. “With the deficit financing to come from borrowing, the Chamber wishes to reiterate our concerns about debt costs. We need to re-assess our debt sources to borrow at lower rates or access more zero-interest loans like the Sukuk.”

The LCCI president stated further that “government needs to watch the rising recurrent (espe-cially personnel) expenditure. It is more sustainable to empower the private sector to create jobs, while government creates a thriving business environment.” The renowned industrialist noted that the 2022 budget placed emphasis on what the figures and policy statements mean for business and the need to facilitate conversation to provide insight on the implications of the 2022 budget of the Federal Government for businesses, policymakers and investors. “As you may be aware, the 2022 Federal Government budget tagged ‘Budget of Economic Growth and Sustainability’, was signed into law on December 31, 2021, in continuation of the Federal Government’s efforts to normalise the Januaryto- December budget cycle.

“The Federal Government plans to spend the sum of N17.13 trillion in 2022, an 18 per cent increase from the sum of N13.59 trillion planned for 2021. “This budget size reaffirms the commitment of the government to pursuing an expansionary fiscal policy to stabilise growth and deepen the diversification of the Nigerian economy,” Olawale-Cole added. Moreover, the LCCI president highlighted some key performance indicators of the 2021 budget to provide some context. According to him, “as of November 2021, FGN’s aggregate revenue was N5.51 trillion (this is 74 per cent of the target).

“FGN’s share of oil revenues was N970.3 billion (representing 53 per cent performance of the prorated sum in the 2021 budget). FGN share of non-oil tax revenues totaled N1.62 trillion (118.8 per cent over and above the target). “As of November 2021, N3.40 trillion had been expended for capital. Of this, N2.98 trillion represents 83 per cent of the provision for MDAs’ capital, N369.9 billion for multi-lateral/bilateral project-tied loans, and N49.52 billion as GOEs capital expenditure.”

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