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HomeBusinessNigeria borrowing may spin out of control, says El-Rufai

Nigeria borrowing may spin out of control, says El-Rufai

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* The rich don’t pay tax in Nigeria
* CBN intervention in the economy should be managed
* Debt management is porous
* Seeks tax reforms

By Samuel Bankole

In an unusual departure from members of the ruling All Progressive Party (APC) and government officials rhetorics on the level of the nation’s debt, Governor of Kaduna State, Nasir El-Rufai on Thursday said Nigeria’s debt stock is tipping out of control and require deft management by the government.

El-Rufai, who spoke at the virtual conference organised by the World Bank, Nigeria office also seeks a stop to the Central Bank of Nigeria (CBN) intervention in all aspects of the economy.

He canvassed reductions in government spending in all other areas of governance in order to finance the fight against bandits, kidnapping and insurgency in the country.

“You can’t fund security more than you are doing now unless you reduce spending on other ministries, departments and agencies.

“The extensive way in which the Central Bank is into everything, I think, has to be addressed and dealt with. And we must look at our domestic debt management and do something about it.

READ ALSO: Nigeria’s naira gains at I&E, steady at parallel market despite CBN policy

“It is getting out of control and we are getting to our debt ceiling as far as liquidity is concerned. And to pretend that our debt-to-GDP ratio is still low, I think is not the answer to the question,” El-Rufai.

He said the country’s domestic debt was getting to its debt ceiling as far as liquidity was concerned, adding that there was no need to pretend that Nigeria’s debt to Gross Domestic Product (GDP) ratio was still low.

As of the end of the second quarter of the year, Nigeria’s total public debt stock stood at N31 trillion and could reach N35 trillion by the first quarter of 2021.

The usual rhetorics by government officials is that Nigeria’s debt remains within the permissible debt to GDP ratio and has room for more borrowing.

Equally, the CBN had been creating assets through intervention in many facets of the country’s economy without liability to back it up, causing dislocations in the regulatory bank’s accounting system.

For consecutive two years now, the CBN has been unable to publish its audited statement of accounts for 2018 and 2019 without any direct statement to explain that away.
Speaking at a virtual event organised by World Bank Nigeria, El-Rufai also stated that most rich Nigerians did not pay income tax.

On the collection of taxes by the federal and state governments, El-Rufai said it was worrisome to note that many rich Nigerians defaulted in the payment of taxes.

“It is a travesty that in Nigeria, as at 2018, just about 20 people in the whole country paid more than N20m in income tax. It is a travesty and something should be done.”

The governor said the federal and state governments were not doing enough to target rich people and get them to pay the right amount of tax.

“I think that rich Nigerians don’t pay taxes. They live in huge houses, drive expensive cars but when you see their tax return, you realise that the civil servants on grade level 12 pay more income tax than they do.”

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