The Presidential Candidate of the Labour Party Peter Obi has urged President Muhammadu Buhari’s administration to restrict borrowing to 5% of the previous year’s revenue.
The former Anambra state governor made the comment via his Twitter page on Thusday.
In 2020, the federal government exceeded 3 percent fiscal borrowing threshold because of the COVID-19 pandemic.
The fiscal responsibility law provides a limit of 3 percent debt threshold for sustainability — but the president can “exceed the ceiling if there is a clear and present threat to national security or sovereignty of Nigeria”.
The presidential candidate also warned that most states that received fiscal bailouts did not invest them properly.
“As a matter of urgency, Nigeria must stop borrowing for consumption, but only borrow to invest in regenerative development projects and other productive ventures,” he said.
“It’s ironic that states that received fiscal bailouts did not repay the loans and are still borrowing beyond their revenue earnings.
“Also, it has become imperative to restrict federal borrowings to the statutory 5 percent of the previous year’s revenue.”
As a matter of urgency, Nigeria must stop borrowing for consumption, but only borrow to invest in regenerative development projects and other productive ventures.
— Peter Obi (@PeterObi) August 10, 2022
In 2021, Obi advised the federal government to invest the funds being borrowed in profitable ventures to enhance the nation’s socioeconomic development.
According to him, debt is not bad when rightly applied and used for investment that will improve the economy, but that borrowing for consumption is bad.
Obi said more people would be thrown into poverty if the government fails to invest in those things that would improve the economy.
