Wednesday, June 21, 2017 4:08 pm
The Acting Chairman, Fiscal Responsibility Commission (FRC), Mr Victor Muruako, has advised the Federal Government to set a debt limit for the three tiers of government to serve as guide for loan procurement.
He gave the advice when he spoke with the News Agency of Nigeria (NAN) in Abuja on Wednesday.
According to him, the Fiscal Responsibility Act (FRA) 2007 provides for the urgent need to set the debt limit of the three tiers of government.
Muruako said that the Federal Government had not complied with Section 42 of the FRA, 2007.
The said section provides for the president to set overall limits or debt ceilings for the amount of consolidated debt of the Federal and State Governments, subject to approval of the National Assembly.
“Most governments operate with the information that they are still borrowing within the limit, although we have not exceeded the standard.
“I will urge the government to make hay, set and comply with Section 42 of the FRA to get it right and set the ball rolling so that every tier of government will obviously have a clear debt limit.’’
Muruako, however, said that due to recession, borrowing to finance capital projects was inevitable.
“I can tell you that for a country that is in recession, one of the obvious ways to get itself out of the woods is to invest and spend in capital infrastructure to strengthen its economy.
“This is so that it can come out of recession, but I can also tell you from the available data from the Debt Management Office (DMO), we are still within a comfortable debt zone.
“No doubt, the debt profile should be a cause of concern to the nation but it is better we get it right by setting the debt limit in compliance with Section 42 of FRA,’’ he said.
The DMO had in June released the overall debt profile of the country with an increase from the N17.36 trillion in December 2016 to N19.16 trillion in March 31 2017.
The Federal Government also allocated N1.84 trillion to debt servicing in the 2017 budget signed into law by Acting President Yemi Osinbajo on June 12.
The FRA 2007 was enacted to promote prudent management of the nation’s resources, ensure long term macro-economic stability and transparency in fiscal operations of the nation’s economy.