23 April 2012

Nigeria: Experts Express Worry Over Country's Rising Debt Profile

Some financial experts have advised the Federal Government to stem the rising debt profile of the country.

They told the News Agency of Nigeria (NAN) in separate interviews in Lagos on Monday that the development of infrastructure would suffer if the rising debts were not checked.

They agreed that the N559 billion earmarked for debt servicing in the 2012 budget could have been directed at the development of infrastructure.

They said that the persistent increase in both domestic and external debt stocks was not healthy for the economy.

NAN recalled that Minister of Finance, Mrs Ngozi Okonjo-lweala, had on April 16 in Abuja, said that Nigerian external debt stood at 5.9 billion dollars while the domestic debt was N6 trillion.

Mr Titus Okunronmu, a former director in the Central Bank of Nigeria (CBN), said that the continuous rise in the debt profile was due to high level of corruption in the country.

He said that government needed to tackle the lapses in the areas of contract awards, with specific focus on over-invoicing.

Okunronmu alleged that some contractors would collect funds for projects without carrying out the contracts.

He said that such practice was bound to impact negatively on the Nigeria's debt profile.

Okunrounmu advised the Federal Government to set up a task force to enforce transparency in the award of contracts.

Mr Adeniyi Adewale, the General Manager, Regency Assets Management Ltd., said that the increase in government expenditure had contributed to the rising debt profile.

He told NAN that many of the sectors that could were boosting government's revenue in the past had dried up.

Adewale advised government to diversify its revenue base to enhance the country's Gross Domestic Product (GDP).

"It is obvious that Nigeria has vast potentials; what is required is a policy framework that can jump-start it," he said.

Adewale suggested that government should stimulate the manufacturing sector to produce more goods and services as well as create more employment.

Dr. Samuel Nzekwe, a former president of the Association of National Accountants of Nigeria (ANAN), said that the rising debt profile would make the naira to depreciate.

He identified misplacement of priorities as a factor for the rising debt profile, adding that most of the funds borrowed were diverted to unproductive areas.

Nzekwesaid that continue rise of the debts could retard the growth of the economy. (NAN)

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