N542 billion for debt servicing is excessive – LCCI

Lagos Chamber of Commerce and Industry (LCCI), has criticised the commitment of N542 billion ($3.6 billion) to debt servicing in the 2011 budget, saying, it is excessive as the amount is over 50 per cent of the amount set aside for capital projects in the budget.

The President of LCCI, Otunba Femi Deru, in a release said that in the 2010 budget, N497 billion was earmarked for debt servicing, which he said was simply not in the best interest of the people.
“This further underscores the need to moderate the quantum of borrowing by government.  The debt management office needs to slow down on the rate at which it is issuing bonds while the CBN should also reduce the issuance of treasury bills.
The cost of servicing domestic debt in the economy has become unsustainable and unbearable. The opportunity cost to the economy is too high.  If $3.6 billion is additionally committed annually to power sector it would surely have a major impact” he stated.
According to him, the chamber note’s  the decision of government to commit N50 billion to a job creation scheme, but said they are concerned as such public sector driven programmes have very little chance of success.
“There is the risk of exposure to heavy politicization, creation of ghost workers and the typical corruption in the public sector.
Jobs created under such schemes are generally not sustainable.  Our view is that it is better to empower the private sector, especially the small businesses, to create jobs.  Emphasis should be on the creation of enabling environment for the private sector to create jobs that are sustainable.  The proposed scheme will be another platform for political patronage and corruption” he said.
He said the chamber has observed huge capacity gaps in the public sector to effectively package and implement the budgets and that this should be quickly addressed by drawing relevant expertise from the private sector, within the concept of public private partnership.
“We welcome the decision of President Jonathan to explore this option.  However, we are firmly opposed to the idea of engaging foreign experts to facilitate budget implementation.  We have adequate project management and financial experts in the country to offer this service” he said.
Source:http://www.vanguardngr.com/