Dr Titus Okunronmu, a former Director of the Central Bank of Nigeria (CBN), on Sunday advised the Federal Government to use borrowed funds to develop infrastructure.
Okunronmu, a former Director, Budget Department, CBN, told the News Agency of Nigeria (NAN) in Ota, Ogun, that the government would have the capacity to pay its debts provided it could stop using it on recurrent expenditure.
He reacted to the International Monetary Funds (IMF’s) disclosure on Thursday that Nigeria used more than 50 per cent of its revenues on debts servicing.
The IMF Senior Resident Representative for Nigeria, Mr Amine Mati, had said that public debt was diverting more resources toward interest payments.
Mati said that although Nigeria’s debt to Gross Domestic Product was low, more than 50 per cent of its revenue went into interest payments.
The official said that increase in revenue was important to bridge the gap and sufficiently pay up or service debts profitably.
According to Okunronmu, there is nothing wrong in borrowing provided the money is used for infrastructure development.
He, however, urged prudence in spending to avert debt trap.
The financial expert also said that Nigeria must find answers to some questions if it must continue to borrow funds.
“From where is the country borrowing? Is it internal or external?
“What actually does it use the borrowed funds for? Are they used on recurrent expenditure or capital expenditure?” Okunronmu asked.
An economist, Prof. Ndubuisi Nwokoma, had also called on the Federal Government to ensure transparency in revenue generation to boost revenue and reduce borrowing.
Nwokoma, a Professor of Economics, University of Lagos, told NAN in Lagos that transparency in public financial management would address revenue leakages.
“We need to take the issue of classification of revenues seriously because oil cannot sustain the economy for a long time,’’ he said