The Lagos Chamber of Commerce and Industry (LCCI) has warned the federal government about debt sustainability issues if it goes ahead with the plan to borrow a fresh external loan of $2.2 billion.
In a statement yesterday, Director General of LCCI, Dr Chinyere Almona, said the plan has caused some stir in the business community driven by the current weak fundamentals in the economy.
She recalled that LCCI had always advised against using only debt financing options to fund budget deficits.
“With an estimated debt-to-GDP ratio of above 50%, our debt servicing expenses are set to swallow our capital expenditure, and Nigeria owes about $17 billion and is the 3rd highest debtor to the International Development Agency (IDA).
“LCCI is taking the responsibility to once again warn about imminent debt sustainability issues and how that may further weaken the state of critical infrastructure in the country.
“The chamber has always advised against solely using debt financing without considering other options to fund budget deficits.
“A critical perspective of further borrowing is the risk of losing steam on infrastructure financing as debt servicing alone may rise above what is set aside for capital expenditure in the 2025 federal budget.
“Another concern is the exposure to the external currency shocks that may result from the depreciation of the Naira against the Dollar in the course of servicing these accumulated debts. The Central Bank of Nigeria (CBN) has continued to struggle with boosting supply in the FOREX market to strengthen the naira but to no avail yet. With all of these concerns, the government’s borrowing appetite needs to be keenly managed,” she stated.