It’s time to stop borrowing for consumption, Obi advises FG

The presidential candidate of the Labour Party (LP), Mr Peter Obi, says the Federal Government must stop borrowing for consumption if it wants to take the economy out of the wood.

He stated this on Thursday on his verified Twitter page, just as he advised that regenerative borrowing should be limited to a statutory five per cent 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,” he said.

Obi also noted that most states that received fiscal bailouts did not invest them properly.

“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 five per cent of the previous year’s revenue.”

The fiscal responsibility law provides a limit of three per cent 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”.

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.

The cost of servicing debt surpassed the Federal Government’s retained revenue by N310 billion in the first four months of 2022.

The Federal Government’s total revenue for the period was put at N1.63 trillion, while debt service gulped N1.94 trillion.