In a recent statement, former Nigerian President Olusegun Obasanjo Warns of Future Debt relief due to their substantial debt profiles. Obasanjo, who secured debt relief for Nigeria in 2003 during his tenure, highlighted alleged mismanagement of the relief funds by successive administrations, leading to the country’s current significant debt burden of N87.91tn as of September 2023, according to the Debt Management Office.
The ex-President emphasized the adverse impact of mismanagement, suggesting that the continent might face challenges in obtaining similar debt relief in the future. Speaking at an event with the 2023 awardees of the Future Africa Leaders Foundation, Obasanjo described debt as a trap and urged leaders to set examples, make bold decisions, and learn from mistakes.
In 2005, Nigeria and the Paris Club finalized an $18bn debt relief agreement, reducing the country’s overall debt stock by $30bn. However, Obasanjo now cautions that due to mismanagement, future generations may not enjoy such gestures.
Furthermore, Obasanjo expressed hope for socio-economic improvement within four years through prayers and thanksgiving during the Christian Association of Nigeria Ogun State’s 5th Thanksgiving service. He encouraged gratitude even in challenging times.
Economists and experts responded to Obasanjo Warns of Future Debt, criticizing the Federal Government for re-accumulating large debts after the debt relief efforts in 2005. The Chief Executive Officer of Cowry Asset Management Limited, Johnson Chukwu, highlighted the need for the government to align expenditure with revenue and channel borrowed funds into capital projects.
The Minister of Finance, Wale Edun, recently emphasized the government’s commitment to shift focus towards revenue and reduce reliance on borrowing. The Debt Management Office reported that while the country’s debt stock remains within sustainable limits, the debt service-to-revenue ratio is a concern.
Experts noted that the consequences of debt accumulation have been a legacy of a substantial debt service burden surpassing capital expenditure over the years. They called for fiscal consolidation and moderation of the cost of governance to ensure sustainable economic growth.
In conclusion, Obasanjo’s cautionary remarks underscore the importance of prudent financial management and fiscal planning to secure and sustain debt relief, while experts stress the need for responsible fiscal practices to prevent further debt challenges.
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