According to LCCI, the rating agencies pinned Nigeria’s deteriorating risk profile down to “its weakening external and government finances, especially the facts that declining government revenues are now falling short of rising interest payments on government debt, inadequate availability of foreign exchange, and heightened exchange rate uncertainty, all in the face of strong global oil prices.
The advocacy group noted, “The N20.5tn budget proposed to the National Assembly by the president for 2023 includes a deficit of N10.78tn, which is more than 50 per cent of the entire budget. The president has proposed that more borrowings will fund N10.5tn out of this deficit. It will be insensitive to go ahead with the proposed borrowing after Nigeria’s debt sustainability has been red-flagged by multiple global default risk rating agencies.
“In response to the warnings from the global risk rating agencies about Nigeria’s debt sustainability, the National Assembly should revise the financing thrusts of the budget proposals to emphasise equity financing and deemphasise debt financing. Issuing equity at home and abroad by inviting foreign investors to invest in state-owned companies, government real estate portfolio.”All rights reserved.