An Economist, Dr Charles Nwaekeaku on Tuesday in Abuja advised the Federal Government to reduce the country’s overhead and other costs rather than engage in incessant borrowing.
Nwaekeaku, an Associate Professor of the Nasarawa State University, Keffi, told the News Agency of Nigeria that continued borrowing by the government would continue to worsen the debt profile and detrimental to the country.
According to him, “borrowing has not helped us, we have always advised our government to look inwards, reduce the overhead cost and other cost and utilise what we have rather than borrowing.
“This is because, so long as you keep on borrowing, you are only postponing the evil day and the country‘s deepening debt and this does not help anybody.
“If the country’s debt profile continues to increase, the tendency is that no Letter of Credit from Nigeria will be honoured.
“And the moment the Letter of Credit from Nigeria is not honoured, that will spell doom for the economy and so borrowing is not good and should be discouraged.
“We should be able to manage what we have; it is because government is not prudent that is why they keep borrowing.
‘’If we can utilise what we have, gradually we will achieve whatever we want,’’ he said.
According to Nwaekeaku, borrowing is the tendency for one to spend in advance the income he is yet to earn and most of us do not understand the implications of foreign borrowing.
“If you are borrowing from the World Bank, Paris Club and other places, they do not always count all the money and give to you in cash.
“They supply you with materials equivalent to the funds you want to borrow or refer you to where you can get the materials with a price and you do not have any bargaining power,’’ he said.
Nwaekeaku said that over 60 to 70 per cent of such supplies were usually discovered to be obsolete and not useful, adding that this had deepened the nation’s economic problems.
On the continued CBN intervention in Foreign Exchange (FOREX), Nwaekeaku expressed fear that the intervention might cease if there was a change in the price of crude oil in the international market.
“We are happy it is sustainable now simply because the price of crude oil has not gone down again but you know the prices of crude oil fluctuate at the international market.
“The only thing is that right now that they are intervening. It behoves on us to make every effort to diversify the economy so that non-oil sector will start earning foreign exchange.
“The moment we have other sources of getting foreign exchange, the pressure on oil money will be reduced then the naira will appreciate.
“Indefinite intervention will not help because any day the oil prices crash. Where will you get money to intervene? So this is the pressure.
“For now, it is a welcome development but we should utilise this period, we should make a difference in the economy so that we shall no longer depend on oil alone,” he said.