In brief
- Warren Buffet opined that chains of habit are too weak to be felt until they are too strong to be broken. This has been the case with Nigeria’s public debt as the country continues to pile into more debt despite its lingering fiscal concerns.
- While borrowing is a global norm, and it is in itself not a sin, the capacity to pay back is the underlining factor amid the rising cost of sovereign debts.
- Countries incur debt to finance key development projects. But, taken too far, the burden of debt repayment can overwhelm a country’s finances – at worst leading to default.
- Although, Nigeria may not be drowning in a sea of debt just yet like the most recent domino (Sri Lanka) that fell in the face of global threats, the ingredients of unsustainable debt are increasingly becoming conspicuous.
- Dwindling reserves, unproductive government expenditure, rising import bill, a weakening local currency, and a growing budget deficit all pose downside risks to Nigeria’s fiscal balance in the near term.
- Therefore, taming Nigeria’s burgeoning debt stock with its increasingly asphyxiating service obligations is cardinal to averting a possible high risk of debt distress.
- Everything must be done to repel an unsustainable debt scenario.
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