Director-General of the DMO Patience Oniha
Nigeria’s public debt crosses $100 bn mark
Nigeria’s total debt stock has at the end of first quarter of 2022 reached N41.60 trillion and crossed the $100 billion mark.
The Debt Management Office (DMO) declared that the country’s debt recorded a quarterly increase of N2.04 trillion.
The new debt figures compared to the N39.56 trillion ($95.78 billion) recorded in December 2021.
According to the agency, “the amount represents the domestic and external debt stocks of the Federal Government of Nigeria, the thirty-six state governments and the Federal Capital Territory (FCT).
“The total public debt stock includes new domestic borrowing by the FGN to partly finance the deficit in the 2022 Appropriation Act, the $1.25 billion Eurobond issued in March 2022 and disbursements by multilateral and bilateral lenders.
“There were also increases in the debt stock of the state governments and the FCT.”
The DMO added that “Whilst the total public debt to GDP at 23.27% was below Nigeria’s self-imposed limit of 40%, the momentum by the government to grow and diversify revenues remains a priority to ensure that public debt is sustainable.”
But the truth is that debt becomes a problem if the revenue base is not strong enough to service the debt sustainably. It invariably becomes a debt problem and possibly a debt crisis.
However, the Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, disagrees, saying the government’s rising debt profile raises serious sustainability concerns.
He explains: “When we take account of borrowings from the CBN and the stock of AMCON debt, the debt profile would be in excess of N50 trillion.
“Although government tends to argue that the condition was not a debt problem, but a revenue challenge. But the truth is that debt becomes a problem if the revenue base is not strong enough to service the debt sustainably.
“It invariably becomes a debt problem and possibly a debt crisis.
“Government actual revenue can hardly cover the recurrent budget, which implies that the entire capital budget and part of the recurrent expenditure are being funded from borrowing. This is surely not sustainable. As at November 2021, debt service to revenue ratio was 76%. The situation had evidently worsened by now.
“What is needed is the political will to cut expenditure and undertake reforms that could scale down the size of the government, reduce governance cost and ease the fiscal burden on the government.”
Yusuf reiterated that it is important to ensure that the debt is used strictly to fund capital projects, especially infrastructure projects that will strengthen the productive capacity of the economy.
He said, “This is the position of the Fiscal Responsibility Act. Additionally, emphasis should be on concessionary financing, as opposed to commercial debts which are typically very costly.”
