Peter Obi advocates restriction of borrowing to 5% of previous year’s revenue

By our reporter| Nigeria should restrict borrowings to a statutory 5 percent of the previous year’s revenue, Labour party presidential candidate, Peter said on Thursday.

Obi, who gave the advise via a tweet on his verified Twitter handle, warned that the federal government must limit borrowing for consumption.

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

“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.

“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 5 percent of the previous year’s revenue.”

Nigeria in 2020, exceeded 3 percent fiscal borrowing threshold because of the COVID-19 pandemic against the fiscal responsibility law which provides a limit of 3 percent debt threshold for sustainability, unless there is a clear and present threat to national security or sovereignty of Nigeria”.

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 N1.63 trillion, while debt service gulped N1.94 trillion.