President Goodluck Jonathan
Members of the Organised Private Sector through the Lagos Chamber of Commerce and Industry (LCCI), have expressed worry over the growing level of domestic debt and the high cost of debt servicing reflected in the 2013 budget presented to the National Assembly by President Goodluck Jonathan.
The Chamber, however, stated that the provision of N100 billion sinking fund for the repayment of maturing debt obligations was a welcome development. In a statement by the President of LCCI, Goodie Ibru, he said the country’s debt profile remains a major source of concern.
“We are concerned about the growing level of domestic debt and the high cost of debt servicing. Domestic borrowing is proposed to reduce from N747 billion in 2012 to N727 billion in 2013, a mere 2.3 per cent reduction, and a staggering N591.76 billion is earmarked for debt servicing,” he said.
He also stated that the Fiscal policy measures in the budget are far reaching, such as the 10 per cent import duty and 100 per cent levy planned to be applied to both brown and polished rice.
“We commend these measures as they could boost domestic production, conserve foreign exchange and create jobs. However, the imposition of 100 per cent levy on rice which is a staple food may have some unintended consequences if there is no adequate supply side response on the domestic front,” he said
If the domestic capacity to grow and process rice is not first put in place, he predicted the risks of a drastic increase in the price of rice which would result in escalation of poverty; escalation of smuggling and corruption at the ports; pressure on government for waivers of duty and the diversion of cargoes to neighbouring countries, thus denying the maritime sector of jobs and revenue.
“For the avoidance of doubt, the Lagos Chamber of Commerce and Industry is in full support of the self-reliance aspirations in food production. But for such a policy to be sustainable there should be a deliberate policy and practical steps to build capacity to fill the demand-supply gap that would be created. Otherwise, the citizens will be further impoverished. The implication of the recent flood disaster on food security is also a factor to take into account,” he said.
He noted that the issue of many government agencies and ministries that are indebted to local contractors to the tune of hundreds of billions of naira is a matter important enough to get a mention in the President’s budget speech.
“As the National Assembly deliberates on the budget, we request that due consideration be given to the problem of indebtedness to local contractors. It is curious that while the government gives considerable attention to securitised debts (redemption of treasury bills and bonds) attitude towards debts owed to contractors are that of indifference,” he said.
He said as the details of the appropriations are made public, further submissions would be made to the National Assembly.