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From Uche Usim, Abuja
The Debt Management Office (DMO) on Thursday disclosed that Nigeria’s total debt as at December 31, 2021, has risen to N39.556 trillion ($95.779 billion), from N32.915 trillion it was on December 31, 2020 ($86.392 billion).
The amount represents the total external and domestic Debts of the Federal Government of Nigeria (FGN), the 36 State Governments and the Federal Capital Territory (FCT) administration.
The Director General of the Debt Management Office (DMO), Patience Oniha, who made the disclosure in a media briefing explained that the public debt stock for December 31, 2021, includes new borrowings by the Federal Government and the sub-nationals.
“For the FGN, it would be recalled that the 2021 Appropriation and Supplementary Acts included total new borrowings (from domestic and external sources) of N5.489 trillion to partly finance the deficit. Borrowings for this purpose and disbursements by multilateral and bi-lateral creditors account for a significant portion of the increase in the debt stock. Increases were also recorded in the debt stock of the States and the FCT.
“The new borrowings were raised from diverse sources, primarily through the issuances of the Eurobonds, Sovereign Sukuk and FGN Bonds. These capital raisings were utilised to finance capital projects and support economic recovery”, she said.
Oniha added that total public debt stock to Gross Domestic Product (GDP) as at December 31, 2021, stood at 22.47 per cent. She added that the Debt-to-GDP ratio still remains within Nigeria’s self-imposed limit of 40 per cent.
“This ratio is prudent when compared to the 55 per cent limit advised by the World Bank and the International Monetary Fund (IMF) for countries in Nigeria’s peer group, as well as, the ECOWAS Convergence Ratio of 70 per cent.
“The Federal Government is mindful of the relatively high Debt-to-Revenue Ratio and has initiated various measures to increase revenues through the Strategic Revenue Growth Initiative and the introduction of Finance Acts since 2019”, she added. Oniha further noted that revenue generating agencies need to be more prudent in their spending so as to free money for the Federal Government to meet various needs.
“We make it look like borrowing is a crime and we give it the toga it doesn’t deserve.
We’ve seen debt levels rising not only in Nigeria but all over. COVID-19 is a result of the upward trajectory.
“All governments borrow. But we need to increase revenue generation”, she added.
But reacting to Nigeria’s rising debt profile, Chairman, Manufacturers Association of Nigeria (MAN), Apapa branch, Frank Onyebu, lamented the poor management of the economy by the Federal Government.
According to him, interest payment on the nation’s debt is almost more than what is available for development. “No country can develop that way. Sometime ago there were reactions that the borrowing was too much, but some other people were of the view that the country has not borrowed enough, now it has gone out of control”. Government needs to restrategise, get technocrats, who know how to manage the economy to do so. Right now, it’s politicians that are managing the economy and that does not augure well with the country. I hope they don’t run the country aground with the way things are going.
Government needs to get square pegs in square holes, get the right people in the right places. The situation is not hopeless anyway.
The manufacturing sector is still not looked at as having something to contribute to the economy. Government takes decisions without manufacturers. But the sector can do much to uphold the economy. All it needs is a conducive environment. Also reacting to the government’s loan spike Dr Muda Yusuf, CEO, Centre for the Promotion of Private Enterprise (CPPE ), observed that the rising debt profile of government raises serious sustainability concerns.
“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 conditions 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. Government actual revenue can hardly cover recurrent budget. This implies that the entire capital budget is being funded from borrowing. This is surely not sustainable. What is needed is the political will to cut expenditure and undertake reforms that could scale down the size of government, reduce governance cost and ease the fiscal burden on government.
