Nigeria’s debt: NES faults debt to GDP metric


By Ismail Auwal

The Nigerian Economic Society (NES) has criticized debt-to-gross domestic product( GDP) metrics for determining the country’s debt carrying capacity.

The Society requested that the National Assembly consider amending Section 42 of the Fiscal Responsibility Act (FRA) of 2007 to adopt the debt-to-revenue ratio rather than the debt-to-GDP metric.

The debt-to-GDP ratio is the metric comparing a country’s public debt to its GDP. By comparing what a country owes with what it produces, the debt-to-GDP ratio reliably indicates that particular country’s ability to pay back its debts. Often expressed as a percentage, this ratio can also be interpreted as the number of years needed to pay back debt if GDP is dedicated entirely to debt repayment.

In its 63rd annual conference, held at Maryam Abacha University (MAUN) in Kano, NES stated that a balance must be struck between incentives for revenue generation and expenditure efficiency.

The gathering of the economist agreed that there is need for the National Assembly to also alter Section 22 (2) of the FRA, 2007 by replacing “the balance of the operating surplus” with “either 80% of its operating surplus or 25% of its gross revenue, whichever is higher, to the Consolidated Revenue Fund”.

The society at the closing of the 3 days conference attended by SAHELIAN TIMES recommended that should be clearly defined ceiling to the use of ways and means by the Central Bank of Nigeria to finance government’s deficit.

This year’s conference’s according to the NES sought to address cross-cutting and specific issues on government policy responses to the fiscal sustainability challenge.

In her address, the NES President, Prof. Ummu Jalingo, said the conference  seeks to address cross-cutting and thought provoking issues and to share information from a broad spectrum of economists, other social scientists, policy makers on the Nigerian economy, amongst others.

Additionally, according to her, the conference sought to address specific issues on government policy responses to the fiscal sustainability challenges. She also noted that the last time an Annual National Conference of the Nigerian Economic Society (NES) held in Kano was precisely forty two (42) years ago in 1980.

The Conference provided a holistic analysis of issues relating to fiscal sustainability it also focused on theoretical issues and empirical evidence on best practices in successful policy responses. Institutional and policy environment, as well as the role of various stakeholders, were discussed..

The opening ceremony of the conference  was chaired by Dr Shamsuddeen Usman, and former Minister of National Planning was well attended by dignitaries within and outside Kano state. Goodwill messages were delivered by the Emir of Kano, ably represented by Alh. Shehu Muhammed Dan Kadai, The Honourable Minister of State for Works and Housing, Prof (Dr) Muhammed Israr, President/Vice Chancellor of Mariam Abacha American University of Nigeria (MAAUN), as well as Prof. Sagir Adamu Abbas, Vice Chancellor of Bayero University, Kano.

Over, 90  researched papers, consisting of four papers at the Plenary Session, five papers each at the first and second Policy Round Table sessions and 78 concurrent session papers were presented.

The papers addressed the critical policy issues that the Government of Nigeria should integrate into its overall policy mix in order to address the fiscal challenges facing the country. The presentations and deliberations provided useful insights that could, if faithfully implemented by policy makers, help address the daunting fiscal challenges the country is presently facing.

Several observations and actionable recommendations were put forward to reposition the fiscal position of Nigeria toward the path of sustainability.

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