Soludu Blames Federal Govt’s Reckless Borrowing For Nigeria’s Inflation Crisis

Anambra State governor, Charles Soludu has criticised the federal government accusing it of plunging the nation into inflation through reckless borrowing and a lack of adherence to debt management rules.

During a panel session at the 2023 Induction Programme for incoming and returning governors on Tuesday in Abuja, Soludo expressed his concerns about the Debt Management Office (DMO) and suggested that it should function as a federation agency rather than a federal government agency.

He emphasised the need for the DMO to effectively oversee the debt management of both states and the federal government.

Soludo stated that as an arm of the federal government, the DMO is unable to effectively monitor debt, particularly the more significant issues that impact the entire country.

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He argued that the DMO should function like the Nigeria Sovereign Investment Authority (NSIA), being a federation agency.

“The federal government’s recklessness is evident in their disregard for the set benchmarks such as the debt service to revenue ratio of 40 per cent.

These benchmarks are only enforced when it comes to states, while the federal government blatantly violates them. The federal government, without any regard for the law, goes ahead and accumulates trillions of debt, leading to soaring inflation.

These are critical issues that need to be addressed in the future, and I sympathise with you, director general,” Soludo expressed.

Earlier in the session, Ms. Patience Oniha, Director General of the Debt Management Office (DMO), provided an overview of the guidelines governing domestic and foreign borrowings for both state and federal governments.

She stressed the importance of allocating funds for debt servicing and ensuring that states operate within the limit of a 40 per cent debt service to revenue ratio.

Oniha also mentioned that the DMO conducts debt sustainability analyses in collaboration with relevant agencies, utilizing tools provided by the World Bank.

She advised the incoming governors to borrow for investments rather than consumption.

“It is of utmost importance that you prioritize your expenditures. Avoid borrowing for consumption and instead focus on borrowing for investments,” she advised.

In his remarks, Bismarck Jemide Rewane, Managing Director/lamented that Nigeria’s economy is stagnating when compared to it’s peers.

He declared that the country has no choice but to reform to guarantee the desired economic growth.

“Nigeria has no choice but to reform, in that way both the government, the governed and the people would be better for it” he said

Also, speaking on the topic of the economy, Ayo Teriba, the Chief Executive Officer of Economic Associates (EA), said borrowing based on income would lead the states into the type of trap that the federal government entered.

“The way forward is to turn to assets” stated Teriba.