Follow Us on Google
From Uche Usim, Abuja
The Debt Management Office (DMO) on Tuesday, explained that the nation’s debt stock increased significantly as the Federal Government borrowed N1 trillion to subsidise petrol imports this year.
Director-General of the agency, Patience Oniha, made the disclosure at a presentation at the Executive Course on Budgeting and Fiscal Transparency in Abuja.
According to her, despite the public debt stock of $42.8 billion, Nigeria is not in any way boxed into a debt trap as the exposure is sustainable and within tolerable limits.
In her paper titled; Debt Sustainability Challenges and Strategic Revenue Mobilisation Initiative, Oniha said that the Federal Government was tackling revenue generation challenges and as such resorted to borrowing to stem the tide.
She assured that the DMO was deploying debt sustainability tools developed by the World Bank and International Monetary Fund to manage Nigeria’s debt.
According to her: “These tools include an annual Debt Sustainability Analysis (DSA) and a Medium Term Debt Management Strategy (MTDS) every four years.
“Maturities in the Public Debt Portfolio are well spread to avoid bunching of maturities and to ease repayments of maturing obligations. The Domestic Debt portfolio has securities with tenors ranging from 91 days to 30 years, while the External Debt Portfolio has securities ranging between 5 years to 30 years.”
The DMO boss explained that despite criticisms of the government’s borrowing, Nigeria’s debt to GDP ratio remains among the lowest globally.
She pointed out that while Nigeria’s debt to GDP ratio was 23.06 percent, countries such as Angola (136.54%), South Africa (69.45%), Ghana (78.92%), United States (133.92%) and United Kingdom (104.47%) have higher ratios.
She however stressed that Nigeria was not alone in rising levels of public debts, pointing out that across the globe, governments were borrowing more to meet with economic and social challenges posed by the Covid-19 pandemic and the Russia-Ukraine war.
“Governments across the world borrow. Globally, debt levels are growing, but it is not a new trend. Debt levels were already rising prior to Covid-19 crisis when compared to 2014. Globally, sovereign debt grew from 49 percent of GDP in 2014 to 57.9 percent in 2019 and in sub-Saharan Africa, from 35 percent of GDP in 2014 to 55 percent in 2019. In Nigeria, this ratio rose from 13 percent in 2014 to 19 percent in 2019”, she stated.
