NIGERIA’s debt profile will jump to N28.2 trillion from initial N26.2 trillion with the recent decision of the Federal Government to borrow N2 trillion from the pension’s fund to finance infrastructural development.

As of last Thursday, January 23, 2020, when the National Economic Council (NEC) at its meeting chaired by Vice President Yemi Osinbajo announced its resolution to take a loan of N2trillion from the pension fund, both foreign and domestic debts were standing at N26.2trillion.

Financial analysts, however, have expressed worries that the current loan, besides increasing the country’s debt burden, would leave the government with little funds to improve the economy because according to them, every penny available would be used to service debts.

Tolani Osinbajo, a financial analyst at Radix Capital in an interview with The ICIR, said borrowing more money would not lead to economic growth.

“In Nigeria, it is a bad thing, because the more money they borrow would not be leading to economic growth, infrastructure and the rest.”

Osibajo argued that the typical drivers that would slow down the economy after borrowing such a huge amount of money are the Gross Domestic Product (GDP), savings rate and population growth.

Seyi Kolawole of NASD Plc told The ICIR that Nigeria is tilting towards a situation where the International Monetary Fund (IMF) would stop giving Nigeria loans due to accumulated debts.

Both Osibajo and Kolawole were of the opinion that Nigeria’s debt servicing per year would be ridiculously high (Debt service is the cash to cover the repayment of interest and principal on a debt for a particular period).

Currently, Nigeria’s external debt has grown by 700 percent from $10.32 billion in 2015 to $81.2 billion in 2019, which means in four years Nigeria has been using half of its foreign profit earning to service the high-level debt that keeps increasing.

Nigeria’s total public debt portfolio as of September 30, 2019, released on January 20, 2020, by the Debt Management Office (DMO) shows that total external debt was N8.27 trillion that covers 31.55 percent and total domestic debt was 17.9 trillion that covers 68.45 percent.

The N2 trillion to be borrowed would be categorized under domestic debt; financial analysts have advised that domestic debt should be invested into the productive sector of the economy and more specifically real sector (education, health and employment).