 The budget office of the Federation says Nigeria now has a limited borrowing space due to its poor debt-to-revenue ratio, stressing that trouble looms for the country if it exceeds its limits. The Director General of the Budget Office Ben Akabwezi, while addressing members-elect of the 10th National Assembly, pointed out that while Nigeria remains healthy with its debt-to-GDP ratio, the country is not with its debt-to-revenue ratio. Akabwezi was speaking to the newly elected and returning members of the National Assembly, which is responsible for the consideration, amendment, and passage of annual budget of the federal government, as well as economic bills like the finance bill. We're now being joined by two guests, our special friends on Plus TV news. We have an economist, Mr. Chagong Chopiton, and we also have Mr. Aqwaga from the Budget Office. A very warm welcome to both of you, gentlemen. Thanks for having me, good evening. That's right. I'll start with you, Mr. Chopiton. Growth rate is obviously affected by debt burden, and it is in the people's interest, and also the government's interest to ensure that debt burden is not on the people. But again, if we look at statistics as at quarter three and reading now of 2022, Nigeria's debt profile, external and internal, rose to 44.06 trillion Naira. I hope I'm correct with this figure, yeah. 44.06 trillion Naira. And the Debt Management Office said that the incoming government of the president-elect, Bola Chinubu, will inherit a public debt of 77 trillion Naira, if 23 trillion Naira loan from the CBN is not secureized. A trader at the market there, a layman, wants to understand these realities. Well, the securitization of the debt I think is very important because that will take it from the realm of illegality and place it well within standard practice with debt management across the world. So what has been happening with that securitization is you add the ways and means loans that the federal government has been using to fund this debt deficit with the help of the central bank. If you add that figure to the 44 million, 44 trillion Naira that you spoke about, then you get the 77 trillion overall debt profile. The ways and means that it stands now is illegal. The government has broken all rules and laws regarding how the ways and means is meant to be used to finance debt deficits. And what they're trying to do now is to basically legalize it by securitizing it. Now what do you mean by securitization? They're simply going to take that loan, convert it to debt instruments that can be traded on the capital markets or the money markets as the case may be. And in so doing, hopefully free up some funds for the central bank to then continue to use to manage the economy. So that's as far as that is concerned. The second part of your question, the debt to GDP ratio is not terrible. In the realm of about 27, 30 percent, we have countries like Japan running at 227 percent of debt to their overall GDP. Countries like the United States went over 100 percent debt to GDP. But those countries also have revenue to tax revenue to GDP ratios in the region of about 30 percent to 40 percent as the case may be. In Nigeria's case, however, yes, our debt to GDP ratio is low relatively comparatively. But our revenue to GDP ratio is far lower comparatively. We currently have the revenue to GDP ratio for around 3.7 percent, the lowest in the world, with the exception of two countries that are at war and with the exception of four countries that are oil producing countries who do not take taxes from their citizens. So technically, our revenue to GDP ratio is the lowest in the world. And that is what we need to keep an eye on in this conversation around debt. We are simply as a country and our government is simply not generating enough revenues to justify the reliance, the heavy reliance on debt to finance budget deficits. We've got to become far more creative with how we go about managing our need for funding these deficits and our need for funding infrastructure as we've seen this outgoing government do over the last eight years. I turn to you, Mr. Vayala Kwaga. You are a senior researcher and a policy analyst at the Budget Foundation. And if we look at what the Budget Office has said already, just as Mr. Shopito has just explained, it says Nigeria's expenditure juxtaposed with the GDP ratio is low at 15 percent. And compared to major African nations like South Africa that has it at 30 percent, you have Morocco at 40 percent, that's according to data. Now, going back to realities of these figures on the Nigerian community, what's your take? Thanks, Loretta, for that question. And the problem, just like Mr. Shopito had said, is that the economy is not as productive as it should be. Yes, we are still within standard limits. I think the World Bank prescribes about a 40 percent ratio between a debt to GDP. And that's fine. But I think the important things we need to look at, because we must question if Nigeria is even industrializing at a rate that it should. But what is the government doing with its finances? How is it managing its revenues? How is it making use of expenditure? And what has the difference between its revenues and expenditures been like for a particular period of time? And what can we hope to see in the future? I think the more important question should be, what is our debt service to revenue ratio? Which, by the way, the Minister for Finance sometime last year promised to bring it down from around 80 percent to around 60 percent. Well, it moved to around 96 percent as at the first quarter of this year. That's debt service to revenue. And I think that's a very, very worrying statistic, because it has far-reaching implications for government earnings. With the little that the government is earning in terms of revenue, it's dedicating more and more of that to servicing debts. And it's not clear. I mean, it's obvious rather that the monies being used for infrastructure, for government spending are actually being used to make government revenues or to increase government revenues as they should. So the question then becomes, so what are these monies being used for? And it would be safe to say that your guess is as good as mine. The monies are not being used productively in an economy that is not absorbing these funds for whatever reason that they have in some way even worsened the situation economically. And CBN recently mentioned that the government has not been able to account for the 23 trillion Naira loan it received from it. And that takes me to the fresh loan that the President has written to the National Assembly for approval, about $800 million to feed the poor. Are you with me on this? Yes, so I mean, this still goes back to the issue of the policy stance and policy position of the government. A simple analysis has shown in my organization, we do this very regularly, serious increases in capital expenditure and recurrent expenditure. And by increases, I mean, recurrent expenditure has been increasing while capital expenditure has been increasing, but at a much slower rate. So the very sectors where the government ought to have been making productive investments that it can supervise, it has not. Rather, it has, for one reason or the other, been paying more of salaries and overheads. The D.J. of the Budget Office has been quoted to have said many times that Nigeria's public spending is one of the smallest in the world. And there has been some research by some practitioners to the effect that Nigeria's public service is actually very small. I think those things are true, but they must be looked at within Nigeria's specific context. What is the level or what is the efficiency of government spending in the first place? Until we can answer that question honestly, the claim or the defense that Nigeria's spending is not enough compared to its size or Nigeria's public service is very small, I think are root points and really sidestep the issue about the problems of corruption, the mismanagement, the loopholes that exist in the federal government's management of the public financial system. Going to the point you made about the central bank, 23 trillion narrow ways and means. Yes, so this is money that has been given to the federal government over a period of nearly 10 years before Buhari came in. It had been in the low 100 millions, but after he came in and is about to leave, it's running into the tens of trillions. So the CBN now has that money on its balance sheet as a negative. It came into the federal government's or the executive's hand as revenue, but it's going to read as an expenditure on the balance sheet of the CBN, which by the way does not make most of its books public, even though in many ways and by many definitions it's a state-owned enterprise, but we do not get to see the balance sheets of the central bank. So how do we know when the central bank is doing well fiscally and financially? So these really are the questions that I think are on the minds and the lips of practitioners and observers and even the international community. Yes, Mr. Shopiton said that the securitisation of that money is actually a good move and I agree. However, will the securitisation lead to improvement in the economy if it is sold in the domestic capital market? That only remains to be seen, but it's a headache, I guess, that the new government will have to take one at all for. Mr. Shopiton, he's still with us there. Yes, yes, yes, I'm here. The budget office says the country is an oil-rich economy, not a rich economy. You want to break that down? Well, I mean, look, saying that we are an oil-rich economy is a subjective statement to make. Whatever you want to describe in riches in absolute terms might be deceptive and might be misleading. We have large oil deposits, yes, compared to some other parts, some other countries across the world. You could say that oil deposits are significant, but then when you equate that to two factors, one, our production capacity, then you begin to ask questions as to how rich exactly are we, and when you then equate that with the revenues that we generate from that oil compared to our population size, then you realise that we are not oil-rich. We are not rich at anything. Revenue, our GDP per capita as we speak today, is below $3,000 depending on which version of the GDP you want to use. You want to look at the PPP, GDP, or nominal, or real GDP. We are trending below $3,000 per capita. So the word rich should not be used within any context as far as Nigeria is concerned. We have fundamental, deep-rooted problems with our economy. We need to grow our GDP exponentially in a very, very short period of time. And the things that our government officials, the policies that our governments have been executing or implementing over the last 20 years is clearly not working in this regard. We are clearly not growing at the rates that we need to be growing to reverse the poverty problem that we have as a country, because you may think that Nigeria is a rich country, but when you look at the population that the country has to feed, when you look at the development needs that the country has, when you look at things like the infrastructure deficit that is running into tens of billions of dollars, then you cannot say we're rich. Our population is growing at roughly around 3% per annum. Our GDP has, in the last 10 years, averaged below that, which means that our GDP is simply not growing at the same rate as our population, which creates a significant problem going into the future for us. For us to say that we're a rich country, we need to be talking about a GDP growth rate of around 10%, which would be three times your population growth rate, which would then mean that in a 10-year period or in a 20-year period, then you could have a situation where the majority of your citizens are living well above the poverty line and you can say that you are beginning to transform into a prosperous nation. I don't understand the reference to our being oil rich when those riches are not translating to development that the man on the street can feel and can touch until we have a situation where our citizens can enjoy high quality of life and a sense of well-being as a result of the status of their country. We cannot, for ourselves, oil rich or rich in any manner. Your last words on this. Light at the end of the tunnel. There's an income government already. It's just a few days to transition. Yeah, I mean, I think there is definitely some light at the end of the tunnel. A large population can be a scary thing, but it's also a potential for a large market and possibly a large tax base. But these must be looked at vis-à-vis the productivity and the income levels of this population. If the incoming government really wants to make some quick wins, they must look at how they can ramp up oil production and at least take Nigeria back to where it was two years ago, at the very least three years ago, when we're doing more at least 1.3 or 1.4 million barrels per day, and then, of course, improve the doing business environment to ensure that manufacturers and exporters can actually take their goods and export them and distribute them within the country so that trade can improve, along with the various monetary interventions that perhaps reconstituted CBN would have to look at and harmonization as well of fiscal and monetary policy, which to a very large extent during Gohari's terms has been very haphazard and has been working at cross purposes. Quite recently, I saw in the news that the federal government was thinking of increasing tax rates, and I think that may not be the right way to go. You are taxing an already impoverished Nigeria, which would further cause more problems for citizens and their livelihoods. Thank you. Finally, before I end, I would like to say that subsidy removal should be a centerpiece for this incoming administration because it's becoming far too expensive. Thank you very much, gentlemen. Thank you, Mr. Vauala Akwaga, a senior researcher and policy analyst at the Budget Foundation, and Mr. Shago Shopito, an economist. Thank you, gentlemen, for being part of the news tonight.