President Tinubu
The country’s inflation rate has jumped up for the sixth time to 22.79 per cent in June this year.
According to the figure released by the National Bureau of Statistics on Monday, the inflation rate in Nigeria, Africa’s biggest economy rose to a new 17-year high of 22.79 per cent in June 2023 from 22.41 per cent in the previous month.
The NBS report read, “In June 2023, the Headline inflation rate rose to 22.79 per cent relative to May 2023 headline inflation rate, which was 22.41 per cent. Looking at the movement, the June 2023 Headline inflation rate showed an increase of 0.38 percentage points when compared to May 2023 headline inflation rate.
“On a year-on-year basis, the Headline inflation rate was 4.19 percentage points higher compared to the rate recorded in June 2022, which was 18.60 per cent. This shows that the Headline inflation rate (year-on-year basis) increased in June 2023 when compared to the same month in the preceding year (i.e., June 2022).”
Food and non-alcoholic beverages (11.81 per cent) led the list of items that contributed to the rising inflation figure.
The World Bank had projected that the removal of fuel subsidy would contribute to the country’s increasing inflation.
In its June 2023 Nigeria Development Update, the bank said, “The removal of the petrol subsidy is anticipated to cause a temporary increase in inflation in the upcoming months before contributing to disinflation in the medium term.”
Meanwhile, the Debt Management Office (DMO) has placed President Bola Tinubu and the two chambers of the National Assembly on red alert over the debt burden of Nigeria.
Cautioning the Federal Government that the country cannot go on with additional borrowing anymore, the DMO pointed out that 73.5% of the 2023 revenue will be deployed to debt servicing.
The Office, therefore, warned that “this high Debt Service-to-Revenue ratio is unsustainable and poses a threat to debt sustainability.”
Evaluating Nigeria’s debt 2022 profile, the Debt Management Office told the Federal Government to stimulate revenue generation drive to attain a sustainable Debt Service-to-Revenue ratio.
The DMO recommended to the federal government to increase the proposed revenue in the 2023 budget from N10.49 trillion to about N15.5 trillion.
The DMO expressed concerns that the Total Public Debt-to-GDP ratio is projected to increase to 37.1% in 2023, mainly due to new borrowings, FGN Ways and Means at the CBN, and estimated Promissory Notes issuance. It noted that “while the baseline scenario indicates that the debt stock remains sustainable, the borrowing space has been reduced compared to the self-imposed debt limit of 40%.
“The projected FGN Debt Service-to-Revenue ratio of 73.5% for 2023 exceeds the recommended threshold of 50% due to low revenue. This highlights the urgent need to significantly increase government revenue.”
The DMO cautioned the government to adhere to existing legislation on government borrowing, such as the Fiscal Responsibility Act 2007 and the Central Bank of Nigeria Act 2007, to moderate the growth rate of public debt.
The DMO also recommended emphasis on revenue mobilization initiatives and reforms towards increasing the tax revenue to GDP ratio.
The Office further recommended private sector participation in funding infrastructure projects through Public-Private Partnerships (PPP); including reduction of borrowing through privatization or sale of government assets.
The constitution provides that the President makes request for approval of loans by the National Assembly.
Many Nigerians at different times frowned at the frequency that former President Muhammadu Buhari was requesting for loan approval and the National Assembly endorsing the request without delay or consideration of the consequences.
The DMO has, however, placed both President Tinubu and the 10th National Assembly led by Senate President Godswill Akpabio, that the debt burden has become too heavy for Nigeria, and no more loans should be procured.
