Prof. Uche Uwaleke, says there was no need to be apprehensive over the nation’s N19.16 trillion debt profile, if the loans were utilised for the development of capital projects.
Uwaleke, a Professor of Banking and Finance, Nasarawa State University, Keffi, said this in an interview with the News Agency of Nigeria (NAN) in Abuja on Wednesday.
The Debt Management Office (DMO), on Monday 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.
Economic analysts had repeatedly expressed concerns over Nigerian’s unmanageable debt profile.
The World Bank had also stated that almost a quarter of the country’s GDP will be used to service debts, thus painting a bleak future for the country.
To this end, Uwaleke, told NAN that the nation’s high debt rate should not be a total concern, If the loans had been utilised in line with section 41 of the Fiscal Responsibility Act 2007.
“So, the concern with the country’s current debt profile should be more with what the loans have been used for“.
He said that the improper application of the loans might result into a bleak future for the coming generations.
“But where loan proceeds have been largely used to finance consumption or non-viable projects, then, the government has only succeeded in mortgaging future generations,“ he said.
He however said, it was important for a country like Nigeria with huge infrastructure deficit to borrow, if it must develop fast.
Uwaleke said that in the event of not borrowing, other alternative was to increase taxes, sale of national assets, printing of money among other sources of raising fund.
He, however, said that an economy experiencing high inflation, huge unemployment and downturn in economic activities cannot afford to adopt any of the aforementioned alternatives to borrowing.
Uwaleke said it was important for governments at all levels to effectively channel the loans obtained to improve the productive sectors of the economy. (NAN)
KC/EAL