From the N12.118trillion level of indebtedness at takeover
by June 2015, the current administration of President Muhammadu Buhari has
grown Nigeria’s public debt to a new height of N26.215trillion as at the end
September last year, the country’s debt agency, the Debt Management Office
(DMO) announced yesterday.
The new level represents a growth of over N14trillion of additional borrowings by the Federal and State Governments in the country within the span of five years of the current administration in Nigeria. The new debt stock represents the country’s almost three years fiscal spending, going by this year’s fiscal plan.
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Presenting the new figures in Abuja, the Director General of
the DMO, Ms. Patience Oniha, attributed the growing trend in borrowing by the
country to a bouquet of reasons, including revenue generation challenge;
fragile nature of the Nigerian economy; lack of utilisation of the Public
Private Partnership (PPP) models in project delivery in the country, leading to
huge deficit budgets and necessitating borrowings and the lack of
diversification of the Nigerian economy, which is still dependent on crude oil
earnings, with its price and supply shocks.
The new public debt figure indicates that between September
2018 and same time last year, the sum of N4trillion was contracted in new debt
obligations, raising the stock from N22.428trillion to the current
N26.215trillion.
According to Oniha: “The total public debt, comprising the
debt of the Federal Government, 36 states and the Federal Capital Territory
(FCT), as at the end September last year stood at N26.215trillion.
“The comparative figure for June last year was N25.
701trillion, which implies that in the quarter July to September last year, the
total public debt grew by 2.0 per cent.
“The total public debt as at end September last year
includes promissory notes in the amount of N821.651billion, which was issued to
settle the federal government arrears of oil marketing companies and state
governments under the Promissory Programme approved by the Federal Executive
Council (FEC) and the National Assembly.”
She also said: “Whereas the last year Appropriation Act
provided for a total borrowings of N1.605trillion, split equally between
domestic and external, only the domestic component of N802.82billion was
actually raised, due to the late passage of the Act and the expectation that
the implementation of this year’s budget would commence on January 1.”
Oniha, while defending the growing nature of the Nigerian
debt stock, explained that much of the proceeds of the borrowing had been
invested in critical projects across the country, including the Lagos-Kano Rail
line, the Mambila Power projects, among several roads.
She insisted that the impact of the financing of the
critical projects was instrumental to helping the country exit recession in
2017, as the deployment of funds to contractors played a significant impact in
liquidity supply in the country
She said the current level of Nigeria’s total public debt
represents 18.47 per cent, far below the 25 per cent threshold allowed for
countries of Nigeria’s status, declaring that the country still has a lot of
room for borrowing.
“The total debt as a percentage of GDP is 18.47 per cent as
at September last year and is within limit of 25 per cent and fares better in
comparison with the debt/GDP ratios of countries such as the United States
(US), United Kingdom (UK) and Canada, with ratios of 105 per cent; 85 per cent
and 85 per cent, respectively.
“However, because they generate adequate revenues, their
debt service/revenue ratios for the same period were much lower at 12. 5 per
cent; 7.5 per cent and 7.5 per cent, respectively,” the DMO boss further
lamented.
She listed part of DMO’s achievements last year to include the issuance of a 30-year Federal Government Bond for the first time, explaining that the issue was to meet the investment needs of long-term investors, such as insurance companies, and support the development of the domestic financial requirements in areas, such as mortgages.
Source: Nigerian Guardian