Nigeria’s borrowing capacity is being rapidly exhausted, according to Mr. Ben Akabueze, the Director General of the Budget Office of the Federation.

He issued this warning during the induction ceremony for newly-elected lawmakers of the 10th National Assembly held in Abuja.

Akabueze highlighted the limited space for borrowing by the Nigerian government under President Muhammadu Buhari, stating that the country’s budget size for 2023 generated some enthusiasm, but the combined budgets of all levels of government in Nigeria amount to approximately 30 trillion Naira, which is less than 15 percent of the GDP ratio.

Comparatively, other African countries have higher spending ratios, with South Africa at about 30 percent and Morocco at about 40 percent.

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The fierce competition for limited resources in Nigeria determines the extent of borrowing, and Akabueze emphasized that the country’s borrowing space is now extremely restricted.

The issue lies not in the high debt-to-GDP ratio but rather in the insufficient revenue to sustain the size of the debt, leading to a high debt service ratio. Nigeria’s debt service ratio is steadily approaching 100 percent, a sign of significant trouble.

Akabueze stressed the importance of considering revenue generation and borrowing capacity when determining the budget size.

He also emphasized the need to prioritize government projects and cautioned against treating the budget as a mere shopping list. Ultimately, the budget should focus on expenditures rather than encompassing every desired item.