Ms Patience Oniha. Director-General, DMO
Nigeria’s debt stock is growing because FG keeps issuing promissory notes,others – DMO
The Debt Management Office (DMO) said on Wednesday that Nigeria’s debt stock is increasing due to a combination of three major factors, among them fequent borrowings and the continued issuing of promissory notes by the Federal Government.
The Director-General of DMO, Patience Oniha, who stated this while speaking as a guest on Channels Television’s Sunrise Daily, said Nigeria has been running a budget deficit for many decades.
The DMO boss added that several loans have been contracted from multilaterals and bilateral while the Federal Government keeps issuing promissory notes to settle obligations for which it doesn’t really have the revenue, adding that borrowing is an accepted form to fund government activities though there should be revenues generated.
She also said the N77 trillion debt projections likely to be inherited before the end of the current administration, can be surmounted with incentives that need to be put in place to ensure borrowings equal balanced expenditure and sustained revenue.
“There are new borrowings for the budget, states, and Federal Government will borrow, ways and means will be approved and all,” she said.
“Nigeria’s debt stock is N46.25 trillion. It includes the debt of the 36 state governments and the federal capital territory (FCT). The federal government is responsible for 84 percent to 85 percent of this.
“What triggers debts and why the debt stock keeps growing is because when the debt stock is growing, debt service also grows.
“The debt stock is growing because Nigeria has been running a budget deficit for many decades.
“In good and bad times with oil prices, we have borrowed. We have been running budget deficits and those deficits are funded largely by 85 percent to 95 percent from borrowing and that is cumulative. These are publicly available data.
“As we borrow each year, it adds up. So, the annual budget deficits are a major component. If you look at this year’s budget, the budget size is N21 trillion, borrowing is N10 trillion.
“The third part – the government has been issuing promissory notes to settle obligations for which it doesn’t really have the revenue. So, that is why the debt stock has been growing.”
Oniha added that Nigeria had contracted several loans in the past from multilateral institutions like the World Bank, the African Development Bank, and bilateral like Germany, India, China, and disbursements are going on.
However, Oniha said Nigeria’s total debt of gross domestic product (GDP) is lowest in Africa.
