by 
THE Senate
yesterday raised alarm that with its approval of $22.7billion foreign loan
request by President Muhammadu Buhari penultimate week, the total debt profile
of Nigeria now stands at N33 trillion. Speaking at the one day public lecture
organised by the National Institute for Legislative and Democratic Studies (
NILDS), on Public Debt in Nigeria : Trend, Sustainability and Management in
Abuja yesterday, the Deputy Chairman of Senate Committee on Local and Foreign
Debts, Senator Muhammad Enagi Bima Enagi, All Progressives Congress, APC, Niger
South, said borrowing had always served as veritable financial platforms for
many countries of the world in running their economies.
According to him, judicious utilization of such loans for intended projects and
servicing the debts appropriately have also been problems for some countries,
particularly the developing ones as Nigeria. This is even as the Director
-General, Debt Management Office, DMO, Mrs Patience Oniha, expressed fears that
economic effects of the coronavirus pandemic might incapacitate and frustrate
Nigeria from servicing its debts appropriately. Speaking further, Senator Bima
noted that realities on ground in the country, in terms of required
infrastructure and debt accumulations between 2006 and now, were not in anyway
connected. He, however, explained that many Nigerians were worried whenever
they heard that their government was seeking one loan or the other. He said:
“From a low ratio of debt to gross domestic product (GDP) of about 3.4 percent
at independence, Nigeria’s total public debt as at September 30, 2019,
according to the Debt Management Office, DMO, stands at about N26.2 trillion
(or $85.4 Billion). “Of this amount, total domestic debts is about N18 trillion
(or $58.4 Billion), which is 68.45percent of the total public debts. With the
recent approval of the 2016-2018 External Borrowing Plan, the total debt stock
would be about N33 trillion and 21% Debt/GDP ratio.
“The big question in the minds of average Nigerians aware of this fact is What
did we do with the money? In other words, where did the money go? “What do we
have to show as a people for these huge debts accumulated over the last four
decades or so?” According to him, in stopping the ugly trend, the Senate and by
extension, the National Assembly, is more than desirous to monitor the
executive on prompt utilization of new loans being sought, to save the country
from going back to the pre-2005 and 2006 debt burden era Senator Bima said
further: “The consequence of these borrowings is that the sheer magnitude of
the Nations Annual Debt Servicing put at about N2.47 trillion for 2020 makes
the provision of basic but essential amenities and infrastructure in the
country almost impossible without further borrowings. “Clearly, Nigeria needs
to get its public finance in order to avoid the potential fiscal and financial
crisis ahead of the nation. “The current debt situation in Nigeria needs to be
properly managed and every borrowed Naira or Dollar, carefully deployed,
especially in the face of the continued dependence of the nation’s economy on
exported crude oil, with its usual price volatility. “Borrowings must be
project-tied and not just to support budget deficit. Furthermore, the projects
must be such to grow the economy and bequeath laudable infrastructure and not debt
for future generations.’’ In her remarks, DMO Director-General, Patience Oniha,
who was quick to say that there was no cause for alarm with regard to the total
budget profile of the country which she puts at $85.390bn or N26trillion as at
September 2019, said the country’s total debt stock as at 2006 when she exited
the Paris and London Club of Creditors was $17.349million. She, however, noted
that annual deficit budgeting and poor revenue generation forced the country
into taking loans which has accumulated to N26trillion as at September last
year. She said: “Concerns have been expressed about the growth in Nigeria’s
debt stock since the exit from the Paris and London Club of Creditors. ‘’It is
true that the public debt swtock has grown from US$17,349.69 million in 2006 to
USD85,390.82 million as at September 30, 2019. “However, it must be recognised
that the current debt stock is the result of cumulative borrowings by
successive governments to finance budget deficits and various infrastructure
projects.” Oniha explained that in order to ensure that the public debt was
sustainable, the Debt-to-GDP Ratio was set at 25%, lower than the 56% advised
by the World Bank and IMF, adding that the total public debt-to-GDP had
remained within the 25% limit, standing at 18.47% in September 2019. “This is
however, only one measure of debt sustainability, the other equally important
measure is the debt service-to-revenue ratio and this is where Nigeria needs
significant improvement. ‘’Actual Debt Service to Revenue Ratio has been high
at over 50% since 2015, although it dropped to 51% in 2018 from 57% in 2017.
The relatively high Debt Service to Revenue Ratio is the result of lower
revenues and higher debt service figures. “Whilst Nigeria’s debt is
sustainable, recent developments in the global environment induced by COVID -9,
already suggest a less than favourable economic outlook with implications for
Nigeria,” Oniha said. Earlier in his opening remarks, the Director General of
NILDS, Professor Abubakar Sulaiman, explained that the objective of the public
lecture was to educate and build the capacity of participants, especially
members and relevant committees of the National Assembly.
Source: Vanguard
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