Nigeria now owes N41.60 trillion in debt
Nigeria’s debt profile as of March 2022 is N41.60 trillion, according to Mrs. Patience Oniha, Director-General of the Debt Management Office (DMO).
Oniha stated Thursday that Nigeria‘s high debt profile was due to a lack of revenues and the National Assembly’s approval of the annual budget with a deficit, both of which increased the country’s debt stock. The engagement was being held on the 2023–2025 Medium Term Expenditure Framework (MTEF) and Fiscal Policy Paper.
Mrs. Patience Oniha reveal : “As at December 2020, the debt stock of the federal, state governments and the Federal Capital Territory was N32.92 trillion. By December 2021, it was N39.556 trillion. As at March of this year 2022, we publish quarterly, it was N41.6 trillion. On the average, federal government is owing about 85 per cent of the total.
“We have been running deficit budget for many years and each time you approve a budget with a deficit, by the time we raise that money because when you approve it, it is giving us a mandate, authority to borrow, it will reflect in the debt stock, so debt stock will increase. Also note that states are also borrowing. So we add their own. They also have laws governing their borrowings and as debt stock increases so does debt service.
“Unless the issues of personnel, overhead and capital expenditure are properly addressed in the budget, borrowing would not stop.”
Furthermore, she stated that: “A world Bank report showed that in terms of debt to GDP ratio, Nigeria is low but for debt service to revenue ratio, we are very high. So, if you look at tax to GDP ratio of these other countries, they are in multiples of Nigeria.
“The World Bank survey report of about 197 countries revealed that Nigeria is number 195, meaning we beat only two countries and that was Yemen and Afghanistan and I don’t think we want to be like those places.
“When the MTEF for 2021 to 2023 was being prepared, it is to say, let’s begin to look at revenues because as debt is growing, debt services are increasing. So, the language we used was for debt to be sustainable in the medium term. Sustainable means you can service your debt without difficulty, without it consuming all your revenues because you have very little for other projects.
“You must look at revenues very closely and I think the discussions you have had with the Customs is part of it. There are many other revenue generating agencies. So, we must increasingly begin to look out for our revenue for funding out activities as opposed to deficit.
“We talk about N11 trillion deficit and borrowing for 2023, how much is the revenue there? That’s one. When we look at the first tranche that was N10 trillion for full year of subsidy and N9 trillion for subsidy next year, the size of the borrowing was 62 per cent of the budget. That’s high. The responsibilities, I think, are on both sides. Query the various expenditure lines and see what it is we can handle. So, if the deficit is lower, the borrowing will be lower and that’s how to grow on a slower pace.”
The session was presided over by Hon. Saidu Abdullahi, the committee’s deputy chairman, who noted that the nation was in an excellent position to continue borrowing. There will always be a need to borrow. No matter how much money we make, the nation must borrow. The sustainability of the debt we are taking on is what we should be concerned about, and based on what she has said, the nation is doing well in terms of managing its debt.
