Economic and financial experts at Nigeria-based economic think tank, the Centre for the Promotion of Private Enterprise, have said that the figures released by the Minister of Finance, Mrs. Zainab Ahmed, during the presentation of the 2023-2025 Medium Term Expenditure Framework have painted a gloomy and disturbing picture of the state of government finances, suggesting that the government is on the brink of bankruptcy.
The centre stated this in its half year economic review, in which it noted that the Nigerian economy over the past six months was characterised by diverse economic vulnerabilities.
According to experts at the centre, the major elements of these reviews are trends in the country’s exchange rate, inflation, GDP debt profile, and fiscal operations of government.
According to the CPPE, as high inflation continues to take a toll on businesses, production costs have been increasing, operating costs across sectors becoming elevated, and profit margins declining.
It said there was also a slump in turnover and sales and business sustainability was at risk in many segments of the Nigerian economy.
The statement read in part, “The figures released by the Finance Minister, Mrs. Zainab Ahmed, during the presentation of the 2023-2025 Medium Term Expenditure Framework, painted a gloomy and disturbing picture of the state of government finances, suggesting that the government is on the brink of bankruptcy. Debt service to revenue ratio for the first four months of the current year is over 100% (one hundred percent).
“The implication of this is that the actual revenue of government over the period is not sufficient to service debt. Therefore, financing of the operations of government – personnel cost, overhead cost, capital expenditure and even part of the servicing of the debt will have to come from additional borrowing. These portend severe vulnerabilities for the Nigerian economy.”
The statement said investors across sectors in the economy were concerned about the high and increasing energy costs, especially the cost of diesel which has gone up by over 300 per cent.
It added that the cost of aviation fuel had gone up by another 300 per cent, while the cost of gas has increased by over 100 per cent.
It noted that the frequent collapse of the national grid makes had made it more difficult for many businesses to continue to sustain their operations, creating serious business sustainability concerns among investors.
“The worsening insecurity in Nigeria is a major problem for investors in the economy. Many Industrialists especially those who are in the agro-allied sector are grappling with challenges getting raw materials from the crop-producing areas of our country,” the statement added.